Sunday, 14 August 2016

A New Budgeting System

On reveiwing my finances part way through this month, I've decided that from next month, I'm going to start a new comprehensive budgeting system, which accounts for all monthly expenditure.

Unlike a previous system I employed, where I just spent what I needed/wanted to and then allocated all expenditure to different categories.  This time around, I'm allocating a budget in accordance with my income, to every conceivable spending category and then recording expenditure under each budget heading, as it occurs.

It's a bit of return to accounting for every penny, but with a different and more income based emphasis, which I haven't actually done for a long time, as I've always had the luxury of a virtually free overdraft that I could utilise. I don't, however want to rely on this anymore and hence this approach is hopefully going to minimise my use of the same.

My chosen expenditure categories are as follows:



LB - Clothes, shoes, trips, etc.

Home - Furniture, homewares, linen, etc.

Me - Clothes, books, shoes, etc.

Savings - A minimum of £100 per month

Regular Commitments i.e. gym membership, charity donations, bills, etc.

Misc - Everything else i.e. school dinners, birthday and other gift purchase, transport, parking charges, etc.

Although I've allocated a set budget to all of these headings, this doesn't mean that I have to spend the total amount allocated each month and any excess that I don't spend, will go towards savings, Christmas gift shopping or overspends in other areas.

It's a small tweak to what I was doing already, by simply expanding the categories to incorporate every conceivable expense, but one I'm ready to make to account for all of my spending and get it properly under control for once.

It's taken most of this year to get to a place where I'm finally putting aside money for savings and whittling the need/wish list down to virtually nothing, but I feel I've made progress and am ready to develop a more positive and practical approach to controlling my spending.

Having said this, I will probably have good months and not so good months, but at least now I'm ready to implement a proper system to facilitate living within my means and not using my overdraft or credit cards. It's pretty exciting for me, although it must seem blatantly obvious to many people.

I'll keep you posted with progress from the end of September onwards.


  1. I try and budget as well, it's so easy to overspend more than we want. I look at my budgeting in a different view, I look at what I need daily, weekly and monthly plus other spending as and when required. We have cash each week, I have £20, this is used for daily and some weekly purchases, ie lunch (if I need to buy) parking and smaller stuff, having the cash I find I start to think do I need that or just want it. The monthly bills all are paid from a second bank account, which we do not draw money from. Our main bank account pays for things link mobile phone bills, gym membership, so if we need to watch our spending this is the account we check first. At the end of the month if we have spare cash, we use it for when we next want clothes of household items. It works for us.

    1. Sounds like a good system. I think it's important to find a system that works for you, as it makes life so much easier and helps prevent financial difficulties, although these can still happen on occasion if something unexpected comes up.

      When OH and I first lived together in London and things were very tight financially, I would always account for every penny that we both earned and spent. I had to, to stop us overspending. It was quite depressing to see how little was left over once all the bills had been paid.

      These days we are lucky enough to be able to be a bit more relaxed about things and he has his account and I have mine and I just take care of and account for my own spending.

  2. This is kind of how we do our budget. We also have a line for taxes, and property taxes. Harvey and I have our accounts together, now that we are both retired it just makes it easier.

  3. First of all well done for making the decision to live within your means. We use a home accounting system which tracks all spending and makes us double check our bank activities monthly or more. What it does make us do is question ourselves and if we need to make changes (like changing the car) we can quickly look at costs per month/year and make better decisions.