Create A Budget
If your finances are in a bit of a mess or you are not on top of them the first step to get back on track is to write a budget. Using the information below from Money.co.uk you can create you own budget and find out where you can maybe make changes that will make life that little bit more comfortable.
Once you have read the information you can download our simple spreadsheet and see exactly what money you have (or haven’t) left over to spend on non-essentials each week or month.
Why budget?
Drawing up a budget makes it easier to manage your money and will ensure you are not caught out by any unexpected expenses.
It will help you find out whether you spend more than you earn, and give you an idea of what you can afford to spend.
This should help you find a clear and simple way to spend less money than you have coming in.
Tips for writing up your budget
Before you write your budget, use these tips to make sure you have everything you need:
Work out when bills go out: Which expenses do you pay weekly and which are monthly?
Be as accurate as possible: If you have to estimate, it is better to overestimate your figures rather than underestimate them
Take your time: To make your budget as accurate as possible you need to set aside time to write it so you can give it your full attention
Think about who the budget is for: For example, if it is for you and your partner, make sure you draw it up together and include both of your incomings and outgoings
Get all your paperwork: You will need all the documents that show your income and expenses, for example bank and credit card statements, utility bills and receipts
Step by step budgeting
Follow these steps when you fill out your budget to make sure your results are accurate:
Work out exactly what you earn: Use your payslips to enter your salary after tax and include any second jobs you have. Make sure you include any benefits you receive, you can get the amounts from your latest bank statement.
Do not duplicate your outgoings: Be careful to only enter your bills once, for example, if you pay for your broadband, TV and home phone together, just enter the total cost.
Remember all the extra bits, for example if you have a car ‘Travel Expenses’ isn’t just fuel, also include an amount in here to cover parking, MOT, Road Tax etc. If they are yearly amounts just divide the figure by 12 and enter it in the monthly column.
Include one off spending: Even if they are not a monthly cost, you need to include one off purchases like a new car or boiler. Think about how much you spend at Christmas and divide it by 12 to come up with a monthly amount.
What do your results mean?
When you have entered all your incomings and outgoings, it will automatically calculate your total income and expenditure on a weekly and monthly basis. It will also show you how much money you have left over each week/month after everything has been paid. If these figures are red it means that the money you have going out is more than you have coming in.
In this case have a look at where expenses could be reduced, are you paying too much on your insurance or energy bills, do you really need the more expensive tv package or can you shop around and cut the food bill?
If you are struggling to balance your finances maybe it’s time to seek help, for advice you can contact Citizens Advice or National Debt Line both of which are free and there to help!
You can download our Budgeting excel worksheet here