Lesson 1: Map Your Money: Income and Spending

Why Start With a Money Map?

You can't make a good money decision until you know where your money comes from and where it goes. This level covers one job: building an accurate record of your income and spending. Every later level, starting with budgeting, uses this map.

Think of it like a satnav. It can't plan a route until it knows where you are. Your money map is that starting point.

This course is educational only and is not financial advice. It describes UK practice, and other countries differ.

Task 1: Gather Your Evidence

People often guess their spending, and the guesses are usually too low. Use records instead.

DO:

1. Download your last three full months of statements for every current account, plus any credit cards you use. Most banking apps let you export them as a PDF or CSV file. A CSV file opens in a spreadsheet.
2. Pick one recent full calendar month to be your check month, for example 1 to 30 September.
3. Write down your bank balance at the very start and the very end of that month. You'll need these figures in Task 5.
4. Open a new spreadsheet, or the free MoneyHelper Budget Planner, which is run by the government-backed Money and Pensions Service.

Three months helps you catch costs that don't come up every month.

Task 2: List Your Take-Home Income

Record take-home pay (also called net pay). This is the money that actually arrives in your account. It's not your salary before deductions (gross pay). For employees, deductions usually include Income Tax, National Insurance and any workplace pension contribution. Payslips are covered in detail in a later level.

DO: Make a sheet called Income with these columns: Source | Amount | How often | Monthly figure.

Include every regular source, for example:

• Wages or salary (take-home)
• Self-employed income, after putting money aside for tax
• Benefits
• Pension income
• Regular money from a partner or lodger
• Maintenance payments

Convert everything to a monthly figure:

• Weekly: multiply by 52, then divide by 12. For example, £400 a week × 52 ÷ 12 = £1,733.33 a month. Don't multiply by 4: that leaves out about one month a year.
• Four-weekly: multiply by 13, then divide by 12.
• Annual: divide by 12.

Set the spreadsheet to do this for you. For example, =B2*52/12.

Task 3: List Every Outgoing

DO: Make a sheet called Spending with these columns: Item | Amount | How often | Category | Monthly figure.

Go through your statements line by line:

1. List each direct debit and standing order, such as rent, council tax, energy, phone and insurance.
2. List card and cash spending, grouped sensibly (groceries, fuel, eating out, and so on).
3. Add each total for the month across all three statements, then divide by three to get a monthly average.
4. Search your statements for annual or irregular payments, such as car insurance, TV licence, MOT, subscriptions and gifts.
5. Don't count transfers between your own accounts as spending. The money hasn't left you.

Task 4: Sort Into Fixed, Variable and Occasional

Give each outgoing one category:

• Fixed: the same amount every month, such as rent, a mortgage payment, a phone contract or a gym membership.
• Variable: comes up every month but the amount changes, such as groceries, fuel, eating out or energy used on a meter.
• Occasional: less often than monthly, such as a yearly insurance premium, Christmas, birthdays or car servicing.

Turn occasional costs into a monthly figure. Add up the yearly cost and divide by 12.

Example: car insurance £540 a year, car service £240 a year and Christmas £360 a year. That's £1,140 ÷ 12 = £95 a month.

This step matters. Occasional costs are why a month that looked fine on paper can still go wrong. Seeing them as a monthly figure shows what they really cost you.

Task 5: Check Your Worksheet

A map is only useful if it's accurate. Test it against your check month.

DO:

1. Add up the actual income received in the check month. Use real amounts, not monthly averages.
2. Add up the actual spending in that month.
3. Work out income − spending.
4. Work out closing balance − opening balance.
5. Compare the two results. They should match, or come very close.

Example: income £2,100, spending £1,950, so +£150. The opening balance was £320 and the closing balance was £470, also +£150. ✔

If they don't match, look for:

• Missed transactions, especially small card payments or cash withdrawals
• Transfers to or from savings or another account that you left out
• Payments that hadn't cleared yet (pending) at the start or end of the month
• An account you forgot, such as a credit card paid from your current account

Fix the gap until the figures agree. Then you can trust your map.

Key Takeaways

• Build your map from real bank statements, ideally three months of them, not from guesses.
• Record take-home (net) income, not gross salary.
• Convert weekly amounts with ×52 ÷ 12, four-weekly amounts with ×13 ÷ 12, and annual amounts with ÷12.
• Sort every outgoing as fixed, variable or occasional, and turn occasional costs into a monthly figure.
• Transfers between your own accounts are not spending.
• Check the map: income − spending should equal the change in your bank balance over the month.
• Free tool: the MoneyHelper Budget Planner. This lesson is educational only, not financial advice.