Without effective budgeting, you risk spending more than you earn, which results in debt and failure to achieve your financial goals.
Despite the importance of budgeting, many appear to be clueless about what they spend.
Over a fifth of people in the UK do not formally budget.
They admit to only having a ‘rough idea’ or no idea at all about the state of their household finances, according to new research from Sun Life.
The study asked 3,000 people about their budgeting habits.
It found that only 44% use either an app, online tool, spreadsheet or notebook to manage their budgeting.
More than a third surveyed said they don’t formally budget, but do always have a clear idea of their monthly incomings and outgoings.
16% said they had a ‘rough idea’ of their household budget and the remaining 6% said they don’t budget at all.
Younger people are more likely to budget than older people, with 57% of 18-24 year olds saying they budget formally compared to just 32% of over 65s.
Younger people are also more likely to make use of technology to budget, with 18% of 18-25 using an app or online tool compared to the UK average of 7% and the over 65s figure of 1%.
What is your preferred approach to budgeting?