Creating a budget comes with many advantages and it is perhaps somewhat surprising that there are still too many people who don't even know what a budget is, let alone successfully using one.

In simple terms a budget is a subtraction of your expenditure from your income. When working out your total expenditure you will make a nice list, which will come in useful later. The difference which is left after this quick calculation is your disposable income, which may or may not be a positive figure, depending on how much you like to shop! You most certainly should have a small amount of disposable income left each month and this should go into a savings account and to pay off any outstanding debt.

You should consider very carefully what you do with your disposable income because most people haven't got a lot to spare. The more you put towards your unsecured debt and into a savings account, the better off you will be in the long run. If you are wasting your disposable income on things you don't need, its important to cut back and this is why a budget is so helpful.

Once you have restructured your disposable income spending you might find that you have a little left over and you could put this towards debt. Instead of spending it, consider putting the money away in an interest favorable bank account, you never know when you might need it.

Once you have constructed your budget and allocated your spending accordingly then it's just a case of sticking to it. You can stick to your budget by regularly revisiting it to make sure you're spending in the right places. If you consistently check your budget then you are in a better position to make the necessary changes. For example, you might clear an overdraft and find that your disposable income increases therefore you will need to reallocate this extra money.