COMMENT
Five Ways To Balance Your Budget

By Cliff D'Arcy
July 25, 2005

On checking my bank statement last Friday, I discovered that I had a mere thirty pence to last me until payday at the end of July!

Don't worry, because this didn't exactly come as a shock to me. Earlier this month, I'd carefully checked all my bills to work out exactly how much I needed for my regular outgoings, plus a little left over for my personal spending. However, this budget is now used up, so I'm forced to stop spending for a while. Actually, that's not strictly true, because I can always fall back on my credit card, but there'll be no more cash transactions until payday.

If you find that you're often left with more month than money, perhaps one or more of these five budgeting tricks will work for you?

1. Keep a spending diary

I first started using a spending diary when I was overspending wildly at University. Recording all of my spending (by cash, cheque, debit or credit card or whatever) in my little red book helped me to understand for the first time where all my money was going. What's more, having to record every last penny in my notebook often put me off making certain purchases. In other words, my spending diary gave me insight into where my money went, plus it actually reduced my spending!

2. Cut back on your cash-machine habit

I believe that the abolition of £5 notes from Britain's cash machines has contributed to our tendency to overspend. I call it "cash-machine inflation" after all, if you withdraw a tenner when you only need a fiver, I bet the extra £5 doesn't last long, does it?

One thing that I've been trying to do recently is to minimise my hole-in-the-wall withdrawals. In other words, if I think that I need £20, I withdraw only £10 to see if I can make do. It's amazing how often that I manage to get by on the smaller amount! One step further is to have "No Cash Withdrawal Days" earlier this year, I went several weeks without using an ATM.

3. Try "Spend Nothing Days"

In my article on extreme budgeting, I explained how I was trying to get through each day without spending even a single penny. By cutting back on unnecessary luxuries, taking a packed lunch to work, and not buying a newspaper on the way to work, I can avoid carrying cash for day after day. Of course, the advantage of not having any cash in my pocket is that I find myself spending less. This is one lesson that we could learn from the Royal family!

4. Avoid paying interest on your debts

With the typical UK household owing over £7,500, interest on our debts gobbles up a fairly large slice of our take-home pay. Indeed, at an interest rate of 15% a year, this debt would add almost £95 a month to our household spending. However, by transferring your debts to a 0% credit card, you can avoid paying interest for up to a year. This could lop a grand or more off your expenditure, which is a welcome breather!

Check out the deck of 0% cards in our new, improved Credit Card centre.

5. Go back to basics

If your outgoings frequently exceed your income, you share your problem with many millions of other Brits. Indeed, as a nation, we spend about £110 for every £100 of take-home pay. So, if you have Champagne tastes and a beer income, don't sit back and let the problem get worse. Tackle it today by boosting your income and cutting your expenses. Read 25 Quick Money-Saving Tips for some ideas.

Finally, thanks to better budgeting, I haven't been overdrawn since early 2003 - I've been in the continuously in the black for more than two years. One further benefit of paying more attention to my budgeting is that my monthly bank statements are a lot shorter. Indeed, they're now two pages at most, compared to five or more in my free-spending past. Result!

More: Find a cheaper credit card, personal loan or mortgage | Visit our Get Out Of Debt centre.