When ends aren’t quite meeting and money isn’t going as far as you’d like, something has to give. Managing available money better can go quite a long way towards narrowing the gap. You need to keep a tight rein on the household budget these days. With the cost of everything spiraling upwards it really is worrying times.

We’re not promising this guide will provide immediate, short-term help (although it can quickly show a rough road-map), but it will help with future budgeting.

It’s a scaled down method borrowed from professional accounting. Tracking income and expenditure, monitoring performance and finding ways to improve is the purpose behind all business accounting, and if it works for business it can work for households too. Once you understand it, it might pique your interest in finance and even lead you to learning about professional accounting.

The Method

Get a notebook or open a spreadsheet to use just for money. A notebook is easy because it’s low tech and you can update it anytime, from anywhere.

Make four columns on the page and head them with Date, Item, Cost/Income and Balance. You want both headings in the third column, so you remember to add income as well as expenses.

Fill in the Balance column first, taking the figure from your latest bank statement. It’s easier if you do online banking as you can get an up to the minute balance, along with any bills due to come off it. But your latest paper statement will work too as long as you correct for recent transactions.

Next, subtract upcoming bills so you get a rounded idea of what’s left to spend.

For your first month, simply record all your expenses and income, filling in the columns whenever you spend or make any money. If you don’t want to do this daily, keep your shop receipts until you’ve had chance to record their details. You can see why a notebook is handy; you can quickly bring your accounts up to date while you’re waiting for the kettle to boil.

In subsequent months you’ll start a fresh page or sheet and copy the balance over. You can then update it immediately by subtracting direct debits or standing orders, noting the dates they’re due in the respective columns.

Ideally, make this a habit and always do it. But take heart because if you hate it, you don’t have to keep it up forever. Even just a few months can help you make big changes in the way you manage money.

Understand the Numbers

You’ll start seeing patterns in your spending and be able to identify exactly where your money is going, for both regular household bills and for general daily living expenses.

It’s easy to dig deeper into any area of spending you choose. Pick a category of expense in your household budget, such as grocery shopping. Notice regular big shops, but also track down top-up spends. You could include buying snacks, coffees out, or work lunches too if you wanted to tot up all spending on food and drink. Or just stick to household meal planning to narrow it down.

Focusing on the exact numbers in individual categories like this can give some surprising results. You may not realise how much mid-week shopping top-ups cost, for instance. Seeing it in black and white highlights areas where savings could be made.

Other categories you could use include:

· Motoring

· Entertainment

· Clothing

· Insurances

· Subscriptions

· Days out

· Take away meals

· Treats for the kids

· Pocket money

· DIY

· Hobbies

Your categories will differ, but you get the idea.

Act on the Information

Having all this new insight into your household budget is a gold mine of useful information to help you get control over spending.

Anytime you notice a high monthly cost, stop, and ask yourself some questions:

· Is that expense necessary?

· Could you do without it?

· How could you trim it down if it’s unavoidable?

Quick fixes could be cancelling some subscriptions, and you might not even notice if you’re not getting full use out of them. Examples might be magazines, streaming services, gym memberships or software.

You can often make considerable savings by shopping to a meal plan, whether weekly or monthly. Decide what you’ll eat at each meal through the week, then make a list of things you’ll need and only buy what’s on it. We all know how easy it is to go into a supermarket for a loaf, only to come out with a basket full of goodies. Making good use of the freezer, batch cooking and cutting down on waste can save loads. There are some nice meal plan templates here, that you can print or do online.

Tracking money using simple bookkeeping gives you a deeper understanding of how hard your money is working, and the opportunity to redirect if things start drifting. It’s a far better method than trying to cut out the nice things in life.

If your finances are more complicated than simple earned income and household expenses, you can set up additional trackers to monitor investments or business interests.

In fact, learning to analyse the household budget like this puts you in a good place to learn more about accounting if it interests you. It could even open doors to a whole new career or business idea.