Budgeting

Quick intro

First of all you need to figure out what your total income is by adding together all sources of money coming in – salary, benefits, money from parents – but NOT any borrowing!

Next you need to work out what you currently spend. You could start by keeping a spending diary for a week and writing down the cost of everything you buy. You can keep track of your day-to-day spending via your mobile phone using the Moneybasics Spendometer.

You might also need to estimate the costs of some things. Do some research by going back through your last three months' bank statements to see how much you’ve spent on various things. It might also be helpful to know the average cost of some items. Manchester University has drawn up a price guide of average grocery costs in the UK.

Now you should have an idea of your outgoings. If you're spending more than you earn, you need to take steps to change that – quickly. Even if you’re living within your means there might still be some really good reasons to make changes. For example the amount you spend on buying lunchtime sandwiches over a year could buy you a week in the sun, and your daily coffees might add up to a pair of Jimmy Choos!

You can draw up your own budget, but there are lots of tools available online to help you do this. Set yourself some realistic targets – don't set yourself up to fail. Also, build in some treats, for example if you plan to make your sandwiches for lunch, allow yourself one day off a week.

How to cut down your spending

We've put together some lists of tips that might help you to find ways to cut your spending. This is a cross-section to start you off, but you might want to do some additional research. Some of these resources are on other websites, so you need to be aware that that CFEB is not responsible for their content.