How to budget

Do you ever say “I don’t know where my money has gone?” That is because you probably don’t have a budget and no controls over your spending. Having control over your spending is one of the cornerstones of building wealth. If you don’t know where your money goes, you can’t know if your spending in any particular area is excessive.

System to monitor spending

Unfortunately, isn’t available in Ireland but most banks do offer some sort of expenditure tracking system through their online banking facility. Or you can use a simple excel spreadsheet to track expenditure. You do need to have some idea of how much you are spending each month and each year.

You also need to spend some time monitoring your expenditure, recording the debits that are made from your bank in the relevant categories.

You don’t need to set out what you spend on each category to the penny but I find the following structure works

Core Expenditure

We all have regular payments such as mortgage, Sky, health insurance etc. It’s the same amount every month, so it is easy to calculate how much it is going to cost you over a year. These are your core expenditures and money should be put into an account for these expenditures each month. Add in an additional 15% for contingencies.


As I have written about previously, savings should be automated and is deducted from your current account just after payday so it becomes another regular expenditure that comes out of your account each month.

Short Term Expenditure

There are a number of events during the year where you spend a lot more money such as Christmas and the kids going back to school. Then there’s the holidays you want to go on.  A standard family holiday abroad will cost about €4,000. All these things should be saved for throughout the year. By sheer repetition over the years, you will have a good idea of how much these will cost, so you can put away money each month for these.

Discretionary Spending

What’s left over can be spent on whatever you want. If you are attracted to something shiny in a shop, you can buy it from the account. Of course, if you know that your discretionary account is running low and there’s a few weeks before it’s topped up, you will think twice about spending…or more likely put it on the credit card! But at least you will know that the essential bills are looked after every month and that you are growing your wealth.

If you budget, how do you structure it? How much time do you spend on monitoring your budget each month? Let me know by emailing me at