Alive & Twitching

Always make sure that you give priority to debts such as mortgage or rent, Council Tax and utility bills. If you are familiar with spreadsheets, you may well find that is the best means of monitoring your expenditure and ensuring you keep to budget. I use this method in conjunction with the Microsoft program, Money, which enables one to analyse one’s expenses. Indeed, Money has its own budgeting facility although I, personally, don’t use it.

I suggest a spreadsheet with 4 columns headed respectively:
Category of expense
Amount spent
Annual budget
Percentage of budget

The first column will comprise your list of expenditure items (see blog entitled Preparing for Retirement). Next, under Annual Budget, type the annual total for each item of expense, adding the total at the bottom. Then after, say, 3 months type in the Amount Spent column the total expenditure for each individual item. Using the calculation facility in the spreadsheet will enable you to ascertain the percentage of the budget you have incurred so far. For example, in the first column you may have an item reading Telephones, mobile & Internet. Your annual budget for that may be £780. That figure will appear in the third column. After 3 months, you may have spent £190 on this category and you would type that in the second column. Then using the calculation function, the percentage of the budget used, being 24.3589, will be produced in column 4.

I use Internet banking and, about once a week, I get my current account up on screen and post the items of income and expenditure into Money. Then I get a report from Money every quarter and enter the amount for each category of expenditure into my spreadsheet to see whether I am keeping to budget.

If this all sounds too difficult, you can always keep written records of your expenses and then carry out periodic checks. Alternatively, you could use the budget calculator on the Financial Services Authority’s website, which looks user-friendly.

Finally, your budget should be reviewed annually in view of the fact that, unfortunately, one’s expenses tend to rise.