You make money, how and anyway you can, to ultimately give it to landlords, shop owners, personal trainers, yoga instructors, and Uber drivers. The list goes on.

The sad truth is, your net worth decreases every day if you don't keep an eye on where it all goes.

'Budgeting' seems to evoke mental images of eating thin porridge for breakfast and saying no to pretty much everything that's fun. This isn't the case; all a budget does is track that steady stream of money coming in and going out.

This tracking is an effort to start paying yourself first. So when payday rolls around, you begin to put yourself at the top of the list of people and places your money seems to disappear to.

It's not something that has to ages to sort out either. Everyone knows how much they get paid and you have a fair idea of the big out goings like rent, so you can start simply with a humble napkin, next time you're having a coffee. Napkin

The Napkin Method

Pull together an idea of what comes in every month - and what goes out.

Regular essential spending is rent, food, internet, heating and phone bills. If you have a car, it includes petrol and insurance.

Regular discrete spending is where most of the rest of your money goes – meals and drinks out, taxis, shopping, entertainment (the cinema or Netflix) and hobbies (such as gym membership).

Now, the irregular spending is what you should to be hyper aware of. It’s the once every-so-often expense that will throw you from a steady spender into eating beans out of a tin until pay day. It’s the surprise spending for things like birthdays, Christmas, your car MOT and tax.

Have a think about it and divide it between regular spending (how often you go out for birthdays) and irregular spending (probably once a year MOT and car tax).

So, now where do you stand?

  • What’s your total income?
  • What’s your total essential and discret spending?
  • Take that away from your income.
  • Now you have a clearer idea of how much you spend, what you could cut down on and possibly save instead.

Budget to save money

There is only one way to start saving – it’s the 50/30/20 method.

  • 50% of your salary goes to regular essential spending like rent, bills and groceries. The essential stuff.
  • 30% on discrete spending, like entertainment and hobbies.
  • 20% is what you should be putting into a good savings account, so you get some money back from your savings.

This is the beginning of an emergency fund or deposit for a home. If you don’t have to dip in and out of it, it could be money for when you finis work and want to travel the world!