Budgeting from the beginning
One of the first articles I ever wrote when I started this blog was on how I budget. I wrote it because it seems clear to me that the key to building wealth is increasing income and controlling spending. I control my spending by making sure that I record each transaction that I make. As I outlined in the original post I categorise my spending so that at the end of each month I can identify in what areas I am overspending.
Since I started accountancy I've been made aware of the accruals concept. This is an important idea in accountancy that states that any income or expenditure should be recorded when they occur and not when the associated cash comes in or goes out.
I use the accruals concept when recording my income and spending. For example, I pay rent on the 10th of each month. This cost of 'living' is clearly spread over the month. However, I record the full amount for the transaction as soon as the money leaves my account. That way I know not to spend money that I don't have.
It's a simple tip: don't spend money that you don't have. Do this by recording and taking note of the money coming out of your account as soon as it occurs.