How to Manage and Track Your Budgeting

Recent statistics have shown that the average home budget has grown markedly in recent times, with an average increase in household expenditure of £554.20 revealed in April 2017.

However, there’s no confirmation whether such an increase in spending can be supported, while there remain concerns that at least some of the uptick in consumer spending may be driven by debt. 

But how can you create, track and manage a viable budget over time, and what are the key considerations in the current climate?

  1. Track Your Budget by Category

Budgeting requires you to define and organise your expenses, usually in concise detail that deals in pence rather than pounds.

Categorising your expenses is an excellent place to start, as this makes it easier to see where you’re spending your money and identify any potential areas where you’re continuing to operate outside of your means.

Fortunately, some credit cards automatically tag your purchase in categories, and you can collate such data to identify worrisome impulse buys or recurring purchases that are making a significant debt in your finances.

This will also help you to distinguish between fixed and variable expenses, which may also identify potential opportunities to save over time.

  1. Create a Ledger That’s Available Offline

While you may manage your budget online, it’s important that you’re able to update and manage this in real-time and wherever you may.

So, you may want to consider creating and utilising an offline ledger, which can be carried with you and used to provide a corporeal copy of your budget and the associated financial data.

We’d recommend that you divide a page in your ledger into three columns, listing each purchase, the date and the amount spent as part of the transaction. 

Using the remaining pages over time, you could consider listing all of your purchases and prioritising these accordingly, allow you to spend your money more wisely and eliminate the most frivolous buys.

  1. Use a Separate Spending Account and a Prepaid Debit Card

When you pool all of your financial resources in a single bank account, you may find it hard to manage your capital and minimise spending in a practical or efficient manner.

However, there are two main ways in which you can negate this, initially by creating an additional account with your bank and using this exclusively for the purpose of housing disposable income.

Similarly, you may want to take out a prepaid debit card, which can carry a finite and capped amount of money that’s available for spending over a predetermined period of time. You can also reload money onto the card once the initial amount has been spent, allowing you to spend the exact amount of disposable income that your budget allows.

This is highly beneficial from a practical perspective, so it’s highly recommended if you’re serious about managing your finances carefully.

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