[jiggy2011]

The advice about budgeting is good common sense. On the other hand I feel that sometimes people address personal finance as a simple arithmetic exercise (income - expense), whereas I think it is sometimes better treated in a more algebraic fashion.

In other words identify the variables in your balance sheet (Hint: everything is a variable) and try to anticipate what happens as things change. Your finances are affected by changes outside of your control, for example the government or local authority can decide to stick your taxes up, changes in the commodities market can affect the price of staples such as a food and fuel or your electric company might read your meter and then slap you with a bill of double your usual amount.

This is something that I find annoying about the UK, whilst all of the high street banks offer some form of online banking none of them to my knowledge will allow me to pull out the raw data and play with it. I'm sure that using some fairly rudimentary statistical analysis I could gain much more insight into the implications of my financial situation.

For example, let's say I get a pay rise. I might be inclined to celebrate by going out and buying a brand new iPad or whatever. But maybe if I sum the amount that I spend at the supermarket each month I notice an upward trend that will wipe out the pay increase within 6 months. Does this mean that I am acquiring "good taste" in a few too many areas or does it simply mean that "cost of living" is increasing faster than inflation and I need to account for that.