Budgeting tips: at the start of the month

Budgeting is not sexy, that is a fact. But there is no question that it is a vital part of organising your finances.

Everyone gets into financial difficulties from time to time – whether it is dipping into an unauthorised overdraft, taking out a payday advance or even needing a full-on loan paid back over a number of months or years.

While this type of thing will happen to the vast majority of people during their life, some nifty budgeting could prevent it becoming a regular issue. So what can you do at the start of the month to budget for the time leading up to your next pay check?

Write it all down

All budgeting really involves is setting out what you need to pay for and what you would like to pay for alongside your income. By doing this at the start of the month, you can note down big expenditures further down the line and reel your spending in at other times to accommodate these costs.

For example, knowing that your quarterly water bill will arrive around the middle of the month and rent at the end could impact your spending capability. If you can, move this cash to another account straight away or make a note of how much you need to have in your accounts on these days.

Once you have everything down – utility bills, travel costs, food, sports clubs, rent and of course a little spending money – then you can have a good idea where you are financially.

Allow a buffer

One problem that many people have is they will underestimate costs. There is a saying that suggests people do half the work they intend to do and double the play. Replace 'work' and 'play' with 'saving' and 'spending' – a pretty accurate picture of lots of bank account histories!

They key is to overestimate costs when budgeting and/or allow a buffer of cash aside from your normal spending that can be used if a bill comes out of nowhere or if you end up spending more than you wanted to on a weekend.

The problem with these buffers/overestimated costs is that when combined with your normal spending, your projected outgoings will exceed your income. While this is not the greatest feeling, it is not time to panic or get depressed. It is however time to cull a few expenses.

The cull

Maybe you could stay in one weekend and concentrate on doing 'free' things – there are more of these activities than you think – or walk/cycle to work for a week. Just be sure to meet your essential outgoings like bills first.

The goal is for your overestimations to leave you in the black at the end of the month, so when you hit payday you can either treat yourself or just give yourself a more comfortable time the following month – and in that way, your budgeting from the beginning of 'month one' can set you up for the months and years ahead.