Be your own accountant

How much did you spend the last time you went shopping?

If you're having difficulty answering that question, then who knows how many pennies and pounds are slipping through your fingers without notice? The key to avoiding debt is to spend less than you earn. It sounds obvious, but it is surprising how many people don't even realize how much they are spending.

If you've ever been on a diet, did you simply assume that you were losing weight, or did you weigh yourself every day? There are exceptions to every rule, but most people will answer to the latter. They say that "what gets measured gets done", and there's no better way to motivate yourself than being faced with the facts in black and white.

The first step to making your money go further is to actually know where it's going, and all you need to do that is a pen and paper. Below we'll look at different kinds of spending and how to record them.


Recurring spending
Recurring expenditure is things like mortgage payments, TV and broadband packages, utility bills, phone contracts, and even things like magazine subscriptions: the important element that defines this kind of spending is that it reoccurs from month-to-month. It does not, however, include things like shopping trips no matter how regular they might be.

The first step is to list all of the items that have an element of recurring expenditure. This can sometimes take a lot of thought if you've never considered it before, and you may be surprised by how many leeches you have on your bank account.

Once you have listed each item, write a monthly figure next to it. If the price is always consistent like, say, 20 pounds a month for a mobile phone contract, this is very easy to do. If the price is subject to change (and assuming the overall price of the service hasn't increased), you can figure out an average monthly cost by adding together the totals from previous bills (12 months or more is ideal) and then dividing it by the number of months to give you an average.


One-off spending
A one-off spend could be a single item or it could be the total cost of a single shopping trip (even if you shop there every day). Working out how much you've spent on one-off spends is very simple because, unlike recurring expenditure such as utility bills, there is no guesswork involved.

It is important to be diligent in making a note of everything you spend. If you are out and about, it can be useful to carry a pocket-notebook with you; alternatively, you could retain all of your receipts and - provided you can remember to do it - make a note of the totals once you return home.


Plastic spending
Plastic spending is spending paid for using a credit card or some other form of credit. It has the devious effect of relieving you of the cold hard reality of handing over cash. By the very nature of a card, it is very easy to lose track of how much you are spending, and it can lead to a very nasty surprise when the bill comes through at the end of the month.

As above with one-off spending, always make a note of how much you spend on your card. As an additional safety measure, it's also useful to take a note of when and where you've used your plastic to help you be aware of any fraudulent items on your bill.


Conclusion
Knowing where your money is going is essential. It'll help you to keep your head above water and give you an idea of how much you can safely spend. Furthermore, it'll give you an idea of where you can skim the fat.

Yes, it takes a little work, but if it helps you to avoid debt then it saves a great deal more work and stress later on.