The first thing to do when you’re budgeting is to look at the amount of cash you get in and the amount you pay out. It sounds simple, and it is.

Start by setting up a simple worksheet – it doesn’t need to be fancy. All you need is a pen and paper and a calculator. Work out what you’ve received and spent over the last 6-12 months. Try to think where every single pound goes and write it down. If you can't get exact figures, take an educated guess.

Income Examples

Make a note of your wages or salary, benefits, pension, interest, maintenance or child support, and so on. For the most realistic view, always put down your income after tax.

Expenditure Examples

Make a list of your regular monthly expenditure like rent or mortgage payments, gas, electricity and phone bills, credit card or loan repayments and insurance premiums.

Some things to bear in mind

To help you track your spending more easily, create categories such as housing, food, saving, debt repayment, clothing and transport. You can update your categories as you go, to make your budgeting really personal to you.

You’ll find useful information about your expenditure from bank and credit card statements, receipts and chequebooks. Keeping your receipts in a folder for each month can help you keep in touch with what you’re actually spending.