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Advice on how to budget and keep a check on monthly spendings to avoid unexpected overdrafts.

man balancing on the edge of a bank note


These days when we are hearing more and
more about errors made in bank accounts, it is even more important to keep a very close
eye on personal expenditure and to check bank statements monthly.

Also, as more payments are being made by Direct Debit
it is not really practical to rely on the balance shown on your account at Cashpoints.
  What is shown as being in your account today may well be deducted to cover a Direct
Debit payment the very next day creating and overdraft.  In order to avoid going into
an unexpected overdraft situation it is a good idea to keep a note of incomings/outgoings
each month.

An easy way to do this is to keep a small cash book.  

  • On the left side list all monies paid into your
    account i.e. salary, premium bond winnings etc.

  • On the right-hand side enter all the outgoings, i.e.
    all withdrawals of cash, and payments by cheque, Standing Order or Direct Debit.

  • At the beginning of each month write down on the
    right hand side all payments which the bank will be taking out of
    your account by Direct Debit or Standing Order before next pay day, such as rent, council
    tax, water rates, insurance etc. 

  • On the left hand side enter monies paid into the
    account including salaries paid into the bank direct and any other cheques or cash.


  • Each time you write a cheque or withdraw cash from
    your account
    enter the details on the right hand side.

To ascertain how much (or how little) cash is left in
your account, add up the figures on both pages.  The left hand page is cash in, right
hand page is cash paid out.  Deduct the total shown on the right hand page from the
total on the left hand page and this is the amount of cash available to you.

By deducting the direct payments from your cash flow at
the beginning of the month even if they will not be paid until later, it shows how much
surplus cash is actually available to spend for the rest of the month. This way the money
should be available to pay them when due.  This helps to prevent spending money which
has been earmarked for other things.

When you reach the bottom of the page total each
column, deduct one from the other and this amount represents the balance at this moment in

NOTE – if the “deposit” (left
hand side) is larger than the “withdrawals” (right hand side) the amount shown
is money still available.  However, if the “withdrawal” side is greater
than the “deposit” side, this is the amount by which you have overspent or
overdrawn.  It is advisable to take remedial action as soon as possible.

When starting a new page you must bring forward the
balance from the previous page.  If this is money still in the bank it should be
entered at the top of the left hand side page (i.e. Deposit).  If you are “in
the red” i.e. overdrawn, this balance should be entered at the top of the right hand

Hints and
Things endeavours to provide general information in relation to various
financial products. We hope you find this information useful. In no
should the information we provide be construed as Hints and
Things providing you with specific advice in relation to your own
circumstances, or on the suitability for you personally, of any product or
service referred to in this article.