Ireland’s Guide To Money And Living

Planning ahead

Last week we covered the creation of a spending diary to help you figure out what you’re spending money on, and where you can make the cuts. This week it’s the turn of the budget planner – using those diary figures to make a spending plan you can stick to.

Firstly, you should calculate your income, from every source. Some experts recommend doing this over the course of a year, in order to get an accurate insight into what you spend each month.

From your spending diary, create a list of monthly expenses and divide these into fixed and variable. Fixed expenses are items or services that generally stay the same each month and that are required for living, like rent or car loan repayments. Variable expenses can change from month to month and include food, fuel, entertainment, etc. You can use a variety of online tools or just create a simple Excel spreadsheet.

Compare the two figures – if your income already exceeds your expenses then you can begin to allocate excess funds towards that holiday in the sun or a shiny new car, or simply to be deposited into that rainy day savings account. If not, your expenses column will have to be adjusted. With your spending diary you’ve already tracked your weekly or monthly outgoings – you should know where you cut back (that daily coffee, perhaps). Fixed expenditure can also be reduced – switch from Sky to Saorview and Netflix, for example, or switch energy providers to reduce your annual energy costs.

Sticking to your budget is important – one shopping spree could skew the figures for the rest of the month, for example. Don’t forget to review your budget on a monthly basis – to make sure you’re on track and to keep your figures up to date.

When not writing about all things personal finance, You & Your Money's editor Conor Forrest enjoys reading, football and getting lost in an ocean of Wikipedia articles.