How to write a budget

Your budget needs to detail all your income, whether this is your salary or money from investments, and all your expenditure, from your mortgage or rent through to the smallest things like buying the Sunday papers.

Also take into account one-off costs that crop up throughout the year, such as your car's MOT, your summer holiday and Christmas. Divide these costs by 12 so they are included within your monthly budget.

Incomings vs outgoings

Once you've got together all your financial figures - for example, from your bank account - you'll be able to compare the two. Ideally, your incomings should be higher than your outgoings.

If you spend more than you receive, don't despair. By writing everything down, it's much easier to identify where there's room for manoeuvre.

For instance, could you lose the gym membership you rarely use? Are you paying too much for your utilities, mobile phone or insurance? Or do you have an eating-out habit that needs to go on a strict diet?

Don't look to balance the books perfectly either. You'll need to have some spare cash, in case of emergencies. You could also use the money you save to kickstart your savings habit.

Even if you only trim your outgoings by £60 a month, by the end of the year you'll have saved £720, which, if put in a cash individual savings account paying 3%, would be worth around £730. Not bad for money you used to spend on less exciting things.