Money Advice in Hard Times

Lots of people I know say they have money problems and lots of these have never done the most basic thing - working out how much you spend on the essentials. Here is a simple exercise (use a spreadsheet or a piece of paper).
Write down how much money goes into your bank when you get paid (figure 1). Now make a list of all the items you pay out every month: rent, mortgage, bills on direct debit, petrol if it is fairly consistent, food, TV, Phone bill, council tax etc. Look at your statement to make sure you have everything. Include amounts for credit card/loan repayments a good amount over the minimum to make sure they get paid off. Add these together (figure 2). Now make a list of all expensive things you have to pay for less regularly: car tax, mot, insurances/bills that don't get paid every month. Add these all together and divide by twelve (figure 3) you might be surprised how high this is. Everything on your bank statements apart from random spending (going out, holidays, alcohol) should be in one of these lists.
Right, now subtract figures 2 and 3 from figure 1:
£1,500 - £800 - £300 = £400. This is your expendable income but don't get too happy yet. I then recommend you do the following:
1) Set up a standing order to pay the figure 3 amount into a savings account every month, this means all your big once per year bills are covered (after some time anyway).
2) Save at least something else into a separate savings account for holidays/unforeseen expenses etc, even £50 per month is better than nothing.
3) Decide how much spending money is reasonable for EVERYTHING else i.e. treats, eating out, going drinking etc. and withdraw this money in cash after you get paid. This is then the only money you will spend in the month, make sure it is not the remainder of your money or when you get a slightly higher food bill etc you might end up spending more than you earn at which point you will have problems again. After time, see how your finances go and you might either have some more money to put into savings for a treat/house deposit/new car etc or you might adjust your calculations if you get an insurance discount, lower rent etc.

It's real simple so spend 30 minutes and you could avoid the hassle of always having no money. Knowledge is power!