Budgeting

Senseless number crunching for control freaks or a useful tool for the prudent investor?

Whether you should budget or not is up for debate in my opinion. I personally don't budget on a monthly or even yearly basis, I simply set a high level savings target both in absolute and percentage terms and as long as I achieve that I am happy.

However, many people swear by budgeting, and I have to admit, when we did use a detailed budget for a while, we found ourselves spending much less as we became more conscious of what things were costing.

There are many approaches and you'll have to figure out which one suits you best, from a simple top down target setting apporach like min to detailed monthly and annual budget.

Budgeting is a great tool for setting a savings goal and making sure you achieve it.

I do strongly encourage everyone to at least try a detailed monthly budget for a period of 2-3 months so you become more aware of what things cost. Also, you must sit down once and work out what you're annual expenditure is and compare it to your annual income. Then see how much saving capacity you have on paper and look at ways to increase it.