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Day 3: What goes in a budget?

Without understanding your spending, it can be very difficult to plan for the future or stay on top of your most important debts.

Your priority debts are what you must focus on paying first. By putting together a budget – also called an income and expenditure (I&E) form - you’ll also be able to look at areas of your spending where you can make changes. If you stick to the changes you make, you should feel more in control of your situation.

Today’s tasks…

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Task 1: Find out what information you need to put together a budget


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Task 2: Start putting together your budget using our free template

Task 1: What do I need to put in my budget?

A budget is a list of all the money you receive (income) and all the things you spend money on (outgoings) each month. Creating a budget doesn't have to be a chore. It just needs to give you a clear picture of your finances.

Understanding your spending

Rory has helped many people put together a budget. Here he'll talk you through the basics.

This task will take around 15-20 minutes, so it’s probably worth making yourself a cuppa first. Once you’ve done this, let’s go through the information you need to take to create your budget:

Add together all the income you receive each month, including wages, benefits, pensions and housekeeping money from family members. If some of your income’s paid weekly or every four weeks, you’ll need to turn these figures into ‘calendar monthly’ ones.

To do this you need to multiply the weekly figure by 52 and then divide this by 12. This will then give you a calendar monthly figure to include in your budget.

Make a list of everything you spend money on, no expense spared (pun intended!). If you’re struggling to remember the amounts you spend, dig out a bank statement and your shopping receipts covering a typical month.

Start with your priority debts and the amounts you spend on them each month. Make a note of any priority arrears you owe, too. If you have a payment plan in place to clear the arrears, make sure you jot this down as well.

In addition to regular expenses, you also need to include things that you only pay for less often, or once a year, such as Christmas, birthdays, car tax or perhaps even vet bills. Divide the yearly costs of these things by 12 to give you a monthly figure to include in your budget. You can then understand what money to set aside until it’s required.

You found these out yesterday. Write the balances for these down, but don’t worry about them too much at the moment. They’re not going to be included in your budget just yet. 

If you have a secured loan on your property, this would be considered a priority debt. Make sure you include this with your most important bills. 

Lastly, note down any money you owe to family and friends.

Now you’ve written everything down, it’s time to start building your budget. Our free printable budget template can help you with this. It may even have sections that you haven’t accounted for yet.

Download our budget template now (PDF)  

Once the budget’s filled in, print it off if you can. If not, you could copy out the budget yourself using the categories from our template. We have the same budget template in Excel, too

Alternatively, you could copy out the different budget categories on a piece of paper, if this is best for you. 

Next, you need to work out what you have left over each month, once everything’s paid for. You can do this by deducting the total amount you spend each month from your monthly income. 

If you’ve got any money left over after you’ve paid for everything you have a ‘budget surplus’. If you’re spending more money than you’ve got coming in you have a ‘budget deficit’. 

Whatever you have - or don’t have – left over will determine what the best debt solution for you might be. We’ll take a closer look at this tomorrow. 

For now, take a deep breath and relax. Call a friend, go for a walk, or watch your favourite TV show. Be proud of yourself. You’ve come a long way already. There are just a couple more steps to go until you get your debt under control.

Helping you become debt free...

“I wish to thank your staff for all the great help they gave me when I was in so much debt.
They were a pillar of support to me.” (Leslie, Essex)

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