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Christmas credit card statements

THE Christmas credit card statements are landing on the mat, swiftly followed by gas and electricity bills and don't forget the Property Tax became due two weeks ago.

No wonder January is the most hated month of the year.

But it also makes it a great one from a budgeting point of view. You have 12 months where you can plan ahead and organise your finances to make sure you're not caught short ever again.

This week I'm showing you how to plan and design a household budget.

I've honed mine over the years and while your exact template might be different, we are all very similar in our spending habits and a little forethought and planning makes a massive difference.

1 What goes in it? – Split by weekly, monthly, annual and once-off spending. Really think about this and keep a spending diary.

Get old bank statements out. The table below is what I include in mine. Pay yourself a "wage" each week for 'walking around money' like coffee, newspapers etc. Don't withdraw any more.

Consider a savings fund to be a monthly expense, no matter how little it is.


2What usually goes wrong? – We're great at knowing what our weekly shopping bill or mortgage is but often we forget the stuff that crops up only occasionally, like dentist bills or the TV licence fee.

Then we're bamboozled and frantically start trying to juggle money to pay it. A good budget plan avoids all that.

3What if the unexpected happens? – It will, because it always does. The washing machine breaks down or the boiler leaks. Normal family life can get in the way of the best laid budget plans.

That's why a budgeted contingency fund is vital. Keep it separate from your 'household' money or you'll be tempted to dip into it.

Buying 10 prize bonds at €6.25 each on direct debit every month gives you €750 a year for such expenses. Cashing them in is a little more time consuming than an ATM card, but that's the beauty of it.

4Getting kids involved – Children learn by example. If you don't pay pocket money, start now. If affordable, give them the amount of their age, e.g €10 for a 10-year-old.

BUT they must save half and budget half for sweets, treats etc and don't give in to nagging for top-ups – it doesn't work with your boss. They'll soon grasp the concept.

5The Science bit – Add up all the figures and divide by how you are paid, e.g monthly. This is the amount to set aside in a 'household' current account every month.

Anything left over should go into Savings or spend a little on luxuries ... I'm not a complete meanie.

Finally, it's not set in stone. Keep it organic and accurate as you go.