Plan Your Income and Expenditure

The value of balancing your income and expenditure was famously summed up by Mr Micawber in Charles Dickens' novel David Copperfield: "Annual income twenty pounds, annual expenditure nineteen six, result - happiness. Annual income twenty pounds, annual expenditure twenty pounds six, result - misery."

When it comes to budgeting the biggest mistake people make is to be too broad in their assessment of their outgoings. Motoring, for example. What do you put down? Do you make sweeping generalisations about what you might spend on petrol, servicing, MOT, insurance etc? Far better to be more clinical, more surgical in your analysis. How many miles did you do last month? Was it a typical month? How many miles does your car do to the litre? What's the current price of petrol? How much did your last service cost? Be this precise when putting down all your outgoings - and do not kid yourself!

The same attitude should apply when looking at your other big areas of expense - household and food. Do not 'guesstimate' these - examine your last three months' bank statements to see what you put on your card, and then think of all those odd little items you may have bought day-to-day with cash. Every number counts!

One area it is easy to overlook, but which you have to account for (no matter how reluctantly!), is your credit card balance and how much interest you might be paying on that each month. That is an outgoing and is very likely to be one outgoing that you will have to bring under control, or eliminate altogether.

Monthly income is likely to be more straightforward, unless you are self-employed of course. But even here it's important to be clear-eyed and forensic with your numbers. And don't forget any savings or investments you have and the interest or dividends they may be earning.

In our opinion, careful planning becomes even more important when you retire or are trying to work out if you can afford to.

Remember, for advice on any aspect of your financial planning call Whitings Wealth Management on 01945 581937, where we will be pleased to guide you through the relevant considerations.

- Richard Franks Based in St Ives, Cambridgeshire.

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