It's the end of the month and I've just done my accounts. In budget terms, February was a success - I stayed within my "money to live off" and I paid down a bit of my overdraft. Of course, February was a short month, which helped, and I was sick for the last week but, with the exception of a £30 tank of diesel, I wouldn't have spent much more money anyway.
One of the biggest "secrets" of my success/failure at money management is what I've done today - worked out my accounts for the next month. It's no coincidence that whenever I've landed myself deeply in debt, I'd already lost track of what I was spending. As the Frugal Zealot said in last week's video, the key is to write it down.
This is how I manage my personal money: I keep two records, a bank "account" and my "Money to Live Off". I use these pages from Filofax to keep my bank "account". It's a type of cash book. (Click to have a better look.)
At the end of each month, on pay day, I write down my salary in the "+" column and then list every single item I can think of: in the "-" column, deducting as I go from a running balance in the "=" column: transfers to savings; the transfer to our joint cheque account (from where the real bills are paid); regular investments; my "petrol accrual"; and my "Money to Live Off". At the end of the process, the balance I have written down in my account should equal my real bank balance on the day before pay day at the end of the next month.
As you can see, if you click on the image, there are a couple of extra columns to the left of the "-" column. That's where I record my Petrol Accrual and the cash I take out of the bank for my Money to Live Off. When the time comes to take actual cash out of the bank, I record it in both the "+" and "-" columns and deduct it from the Money to Live Off column (or the Petrol Accrual column). In effect, I've added that, say, £40 back to my bank balance and then withdrawn it out of the bank, leaving the eventual bank balance unchanged.
I know I've talked about my Money to Live Off before, but here how it works. It's my allowance. In a notebook, I write down every single payment I make out of that allowance, and I keep going until the money runs out. It looks a bit like this:
(Typed up so that you don't have to suffer my dreadful handwriting.)
If I have £5 left in my wallet at the end of the previous month, then I'll add it to the total, so the month will start with £205 instead of £200. It doesn't matter what I spend the money on, just so long as I know how much I have left and don't go over the budget.
I know I'm a bit of a Luddite, keeping both my main money records on paper, but I find it helps me to be able to look at them and amend them at any time, not just when I'm at the computer. And it gives me some positive reinforcement that I've £x left over or I've managed to save £y or whatever. When I don't keep these records I get into trouble, spending more than I can afford and going overdrawn at the bank, so this system works for me.