If you’re on a tight budget, make sure you know exactly how much money you have spare. Use a spreadsheet program like Excel and have a column of income (whether from a full-time job or online survey sites) and a column of expenditures. For each month, put in the outgoing column everything you know you will be spending money on, such as rent, food shopping and electricity bills. For the latter two, work out how much you normally spend, and then add a little more as a margin for error.
Once this is done, work out the difference between income and outgoing for that month. This is the amount you have left over to spend on non essential things, such as going out or buying DVDs. Although this isn’t always the most accurate way of tracking your levels of spending, this is a way to spot any possible causes for being in debt. You may notice that you are leaking money in a certain area of your personal life that has a knock on effect to all of your other expenses. By identifying this, you can improve your debt management skills dramatically.
It’s a very good idea not to spend all of this “spare money.” Each month, try to have something left over that can go in a savings account. After all, you never know when the car will break down or the boiler stop working. It’s incredibly useful to have a supply of money ready for emergencies.
Besides, if the amount in the savings account gets higher than you need, you can always treat yourself to something really special. But bear in mind if you have outstanding credit card payments to make, it can be better in the long run to pay of these debts early. That way you can avoid wasting money on interest charges.
