HOUSEHOLD BUDGETS: 3 tracking points

The idea of budgeting is scary - imagine limiting your spending? EEEEEEK! But there's a simple way to make a budget easy and work for you. And that's to create the budget tailormade to your spending habits, wishes and wants. It's only a piece of paper with a financial plan attached, nothing scarier than that!

So a budget works best if you understand how and what you spend, and why you spend.Just like Weight Watchers asks dieters to track food consumption, all good budgetters should note how and when they spend every single dollar. Try this:

1. Carry that notebook
Taking notes of how you spend, why you spend and how much you spend feels like hard work but will generate amazing insights. How many of us have had a $50 note that just seems to disappear? Tracking your spending is the best way to find out where it went. Keep track of every packet of chewing gum you buy or Diet Coke you splurge on all day, every day for a month. If you really hate the idea of carrying a notebook, try tracking on your computer with this neat trick.

2. Start taking note of yourself
Tracking helps you work out how much you're really spending (most of us underestimate and just wonder where the money went). The other bonus is that writing something down makes you conscious of what sort of mood, events and emotions are going on that might trigger certain purchases. A month of writing things down purchases seem rational and which are emotional.

3. Assess what you really spend day-to-day
At the end of your tracking period, work out what you spend in a week and times that by 52 and divide by 12 to get an accurate monthly average of your day-to-day cash spending. This becomes an invaluable planning tool to get a handle on your spending, budgeting and financial goals.

Pictures: Polyvore