Lesson 1
Audit Your Current Monthly Spending
Track your transactions to see exactly where your money goes every month.
Review your bank statements
Before assigning percentages, you must know your baseline. Download the last three months of bank and credit card statements. Categorise every single transaction into 'needs', 'wants', or 'savings/debt'. Be ruthless; a recurring £10 subscription is a want, not a need. Use a simple spreadsheet to total these amounts by category. Calculate your average monthly spend per bucket. This provides the ground truth required to adjust your future spending. Mistakes to avoid include underestimating variable costs like utility bills or irregular maintenance. Once you see the numbers, you will likely spot 'leaks' where money disappears on non-essential items. By seeing the hard data, you transform a vague goal into a concrete plan. Total your essential spending first. If your needs already exceed 50% of your income, you need to identify one area to reduce before you can realistically save 20%.