Budgeting

Creating and following a budget is the first step towards being in control of your finances. Your budget should help you answer two important questions:

• Do I spend more than I earn?
• What can I afford to spend?

By having a detailed plan showing your monthly incomings and outgoings, you will be less stressed as you can plan and monitor your spending habits. By filling in the simple budget form provided, you can make sure all your monthly outgoings are covered, cut back on unnecessary spending and save money in the long run. A budget does not just mean save, save, save. It will identify any money left over from your monthly outgoings, meaning that you get to treat yourself once in a while without feeling guilty!

Creating a budget may take a little concentration, but it is not difficult. Here are some points to help you get the most out of your budget:

• The most important thing is to be honest! Don’t skip certain areas or underestimate your spending – it’s only you who will suffer in the long run.
• Try and be as accurate as you can; keeping regular records of everything you spend will ensure you get the most out of your budget.
• Use your budget to explore every option available to improve your financial situation. For example, look at whether you are maximising your income or whether you have cut back enough on unnecessary spending.
• Try and keep your spending as disciplined as you can. Use your budget as a guide to your spending – producing a shopping list is an effective way to stop impulse spending.
• As most people get paid monthly, it is best to construct your budget in this way too. Paying your monthly outgoings in this way whenever possible allows you to get an accurate look at your expenditure every month.
• Gather up all your standing orders, direct debits and receipts wherever possible from the last three months. This will help to give you an accurate idea of what you spend.

Having a budget will help you prioritise your spending, and deciding what things are important will let you manage your money well. Here is a general guide:

• Your bills are the most important expenses to be covered every month – For example, your rent/mortgage, utility bills (gas, water and electricity), car payments and council tax.
• Day-to-day requirements such as food and travel.
• Occasional costs. Some of you may have outgoings that come out every three months, or yearly, so make sure you account for these in your budget.
• You should always try to put money aside for emergencies, no matter how little. Unexpected situations can occur and you will benefit greatly having an emergency fund.
• The expenses above are what need to be covered first and foremost within your budget. After this, you can think about saving for future plans such as buying a house, children or education.

Creating and sticking to your budget will affect your lifestyle as well as your finances. As difficult as it may seem initially, stick at it! The benefits will soon mount up, leaving you in a more positive financial situation and hopefully more money to spend!