City : Money, Housing and Benefits : Budgeting

Money, Housing and Benefits

What is budgeting?

Budgeting is where you plan what money you'll have coming in and what money you'll spend every week (or every month). 

money.gif It's important to budget what money you have and what you need to spend on to make sure you don't overspend and get in to debt.

money.gif It's even more important to budget if you're already struggling with debt, as it lets you see how much you can pay back your debt each week to make it managable.

Below we've shared how to create a budget, some top tips for budgeting and cutting costs, and where you can go to help...

  • Signs That you Need to Budget


    • You can't sleep because you worry about money.
    • You are spending more money than you have.
    • You regularly take out pay-day loans.
    • You don't have an emergency fund.
    • You don't know how much you are spending each month.
  • How to Create a Budget


    Figure out what you are earning and what you are spending:

    • Leave yourself an hour or two to sit down with all your bank statements and receipts. Work out the money you have incoming and what's outgoing (i.e. how much you're spending).
    • If you use a bank then your statements are a brilliant way of keeping track of what you are spending on what.
    • If you mainly use cash then keep receipts from all your spending for a month or two to see where your money is going.
    • Once you've done this, write down all your incomings alongside your outcomings and calculate a total money spent and a total money left.

    information.gif  When you write your income on your budget, only put money that you are sure of, don't put down money you might get!

    • Once you've done that, try and plan your incomings and outgoings for next month. Create a plan for the total spend and a total money left over if everything went to plan.
    • Think about all your expenses, here are some things you might want to include: Housing / Bills / Cars (Insurance and Maintenance) / Travel / Food / Entertainment.

    information.gif  Plan in some money to treat yourself with, there is no point budgeting to save 30% of your income if that means you never get to go to the cinema or go for a drink with friends.

  • Once You've Made Your Budget


    Once you've written it have a good look at it. Go back through what you've written and have a think about how you are spending your money:

    • As a general rule you should try and spend no more than 90% of your income. This means you have 10% saved for hard times or if something unexpected occurs like your car needs fixing.

    • Don't worry if you struggle to keep to your budget for the first few months, remember it is about trial and error and it may take you a while to get the hang of it!

    • Keep reviewing your budget, check it every month to make sure that it is accurate, the more accurate it is the more you will know about your situation.
  • Top Tips for General Budgeting


    • Be honest: Make sure you're honest with yourself about what you earn and how you spend.

    • Write down everythingWhen you write up your budget include literally every expense, from the £1.50 you spent on a bus ticket to your rent payment.

    • Prioritise: Make a list of the ten most important goals you have. Are you saving for education costs, for buying your first house, for getting out of debt, for a summer holiday? Which is the most urgent?

    • Set realistic goals: Budgeting is like dieting; it won't work if you set unrealistic goals.

    • Motivation: think about why you are budgeting and focus on it to motivate you so you can stick to your budget.

    • Get support: Don't be worried about asking for advice, there are people out there that are happy to help you - including family members or friends.

    • Expect the unexpected: save some money for emergencies, in case your car breaks down or you need to have something replaced. Having some money put by will stop an emergency becoming a disaster.
  • Top Tips for Cutting Smaller Expenses


    • Look for small savings: You'll be surprised how they add up! If you buy a large latte from a coffee chain every day, you can cut it out altogether by bringing one from home, bringing your own mug, or you could buy a small rather than a large. If you save £1 a day on coffee then in a week you will save £5 and £20 in a month!

    • Food shopping: If you go food shopping a couple of times a week then try and put it into one trip and buy everything you need in one go. People tend to spend more money when they go shopping regularly. Don't go shopping on an empty stomach and plan meals for the week ahead so you only buy what you need. It will also save on petrol!

    • Clothes shopping: You can get much better value for money if you wait till the end of season sale where you can often get up to 60/70% off.

    • Clean out your junk: Sell the stuff that you don't want or use any more online to get yourself some extra cash. eBay is a great way to clear space and to get some extra spending money, and MusicMagpie is a great way of getting rid of your old CDs and DVDs.

    • Try some DIY: If you know you spend a lot on lunch every day then bring in your own - even just for a couple of days per week. Block out time on Sunday to make your own food and you will be surprised at how much you save. 
  • Top Tips for Cutting Larger Expenses


    • Know how much you are paying in your monthly bills: It’s easy to just let this one slide by, but if you use a Meter Readings app it will help you keep track of how much you are spending so you can think about moving provider or getting a better deal.

      If you share a house with one or more people then try using a Household Bills Splitter App to work out how much each person owes.

    • Travelling to workIf you drive to work but have a bike then think about cycling, it will save you money on petrol and help you get fit at the same time.

    • Quit smokingIf you smoke, try and quit. It will save you a fortune aside from the obvious health benefits!
  • Best Apps for Saving Money


    • 08 Wizard: At 99p this app makes premium phone numbers into local calls, saving you money if you make a lot of 0800 calls. There are some free versions in both the Apple Store and Google Play Store if you search around.

    • Toshl Finance: A free app that tracks your spending in a graph giving you an easy way to see where you are overspending.

    • Wallet - Finance TrackerAnother free app that allows you to track your finances, upload loyalty and rewards cards, as well as budgeting. You can also sync with your bank to get automatic bank updates to your budget.

    • Compare Prices on Amazon & eBay: This app allows you to scan the barcode on an item and it will go online to check whether the same item is cheaper on Amazon or Ebay. If you find it cheaper online you can then save the item to the app to check back later.

    • MPG Calculator: This tracks your driving using GPS and analyses your style to make sure that you are being fuel efficient.  You'll need to pay for the app, but if you improve your driving style, it will pay for itself in petrol savings.

    • A free app that compares UK fuel prices so you can always see which provider will give you the best deal.

    • Voucher Sites: There are so many different voucher sites where you can get discounts for all sorts of things. Here are just a few: Groupon, My Voucher Codes, VoucherCodes, and Wowcher.
  • Where to Get Help


    • Christians Against Poverty: A national debt counselling charity who offer free advice and guidance on money issues. They offer help to anyone regardless of religion, race, or situation.

    • Money Advice Service: This government run service offers loads of free advice and guidance on all sorts of money issues on their site and through their phoneline.

    • Citizens Advice: A charity offering free guidance on money and debt problems.

    • Step Change: A charity offering free advice and guidance on debt.

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