By Martin Updated May 2015
The problem with most budgets is they don't work! They look at a typical month's spending, but what about the daily coffee, weekly shop and annual holiday?
What's the point of a budget?
A budget done correctly is the most precise tool for analysing your finances imaginable. It answers two key questions.
1. Do I spend more than I earn?
An instinctive assessment is easy - if you're eating up your savings or building up debts, you're likely to be overspending. Yet before you can solve this it's important to get an accurate idea of the size and scale of the problem.
This is nothing new - Dickens' Mr Micawber laid out the principle pretty well in the 19th century:
Annual income twenty pounds, annual expenditure nineteen six, result - happiness. Annual income twenty pounds, annual expenditure twenty pounds six, result - misery.
Major overspending can lead to a debt spiral and severe problems, that's why the Budget Planners are all designed to definitively answer this problem and give you a real assessment of your finances.
What can I afford to spend?
Once you know where you're spending, you can start to alter and prioritise what you do with your money to enable you to stick within your means.
While the budget planners include tools to enable you to work out how to prioritise within your means, the real difficulty is sticking to it. The Piggybank Technique is designed to help you do just that.
What's different about this budgeting technique?
It's often said "In debt? Do a budget!". "Skint? Draw up a budget!". "Wife run off with the milkman? BUDGET!" Yet while budgeting is seen as a panacea, unfortunately most budgets are bunkum.
The main problem is that because they concentrate on a typical month, they massively underestimate your real spend, as this misses huge costs such as Christmas, summer holidays, new sofas or even changing car every five years.
Broad categories like "motoring" make it too easy to forget the small expenditures that add up. Instead it needs be MOTs, new tyres, petrol, insurance, breakdown cover and more, hopefully the budget planners counter that by having nearly 100 separate categories.