So last week I set out my goals for paying off my mortgage, and working on savings for my FIRE life, and for retirement later on.

But reaching those goals is going to require a reorganisation of my current finances – making my money work for me, rather than just letting it wander off without notice.

I’ve been reflecting this week on my attitude to money and what needs to change for this to be a success. And I have concluded that I’m fake frugal. I think of myself as not really being a spender; there are no cupboards full of shoes and feather boas in my bedroom; Starbucks rarely gets my cash. And yet hundreds of pounds per month slip through my smug little fingers and off to goodness knows where. Thinking of myself as frugal is quite dangerous because it means I have been assuming things will just work themselves out.

So the answer to this is mindful spending, or ‘setting a budget’. Budgeting is the first step to making the most of what you make: whether you are struggling to pay debts and need a Dave Ramsey style kick in the pants or if you need some help with working out what’s possible.

There’s also a real value in appreciating what you have – being grateful for the money you have, and taking care of how you spend it.

So, with that in mind here is my approximate monthly budget. I will set one monthly as well but this is the big picture and includes annual costs which will often come out in one month. It’s a pretty fair whack, and whilst it represents a reduction in most areas of spend (see what I mean about being fake frugal?) it still includes money for holidays, eating out, and a whole host of areas I could cut back on further. The plan below equals 60% of my income and I hope, during this year, to work on my priorities and cut it back further. But for now it feels like enough to make a difference without sending me screaming for the hills.

Charity	£       30.00
Insurance	£    277.00
Rent and utilities	£ 1,500.00
Childcare	£ 1,000.00
Groceries	£    300.00
Holidays	£    300.00
Transport	£    300.00
Entertainment	£    200.00
Eating out	£    175.00
TOTAL	£ 4,082.00

This means I can pay  £ 1,500 into a stocks and shares ISA, and  £1,200 as an over-payment on the mortgage, in addition to a pre-tax pension contribution of  £ 1,250. This means I’ll be on track to my goals. Woohoo!

Let me know what you think!