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Making a budget

Budgeting advice. Why you need to budget

What is a budget?

A budget is a list of all the money you have coming in and going out. You might have heard it being called ‘income and expenditure’. It will usually cover one month so you can split out any money you spend over the full year to see how you are getting on month-by-month.

This is the first step towards feeling more in control of your money. It helps you to see clearly where you are falling short and put money aside where you will need it.

We always make a budget with you during a debt advice session. We use this to:

  • Decide what kind of support you need
  • Help you keep your finances on track

Our monthly budgeting templates

We also have budgeting templates you can use yourself. Download them then take some time to gather the information you will need to fill it out. You will need details about:

  1. How much money you have coming in: wages, benefits, and pensions
  2. What you need to spend: from food and toiletries through to energy bills and insurance
  3. How much you need to spend on any debt repayments: including any fees or interest

Ready to get started?

  1. Download our free monthly budgeting template
  2. Read our guide to making a budget
  3. Watch our video introduction to budgeting

Think you need a bit more help?

If money is becoming a worry, we are here to help. We know that sometimes it can be too much to deal with and too complicated to work out on your own.

Let’s deal with it together. The easiest way to get started is to start debt advice online.

  • You can start, pause and re-start at any time that suits you
  • It has no impact on your credit file
  • Our debt advice and support service is free and based on your needs

Questions people ask us about budgeting

Why is budgeting important?

It is the key to looking after your money.

You may think you have a good idea of what is coming in and going out. But when you see it listed in a budget, it is much clearer.

This can help you when things are getting tough and help you find a way to get out of or avoid debt.

Budgeting is important whether you are just trying to keep on top of rising living costs or you are already behind with important payments.

I am just about keeping up with my bills and spending:

Un-planned spending or the types of things we need to spend money on every now and then can catch us out. Put money aside in your budget to cover this sort of thing. Then you can see if you are still able to keep up.

If you are not sure if you need help, take two minutes to answer some quick questions.

I need more help than just trying to live on a budget:

There are different ways to deal with money worries, depending on your situation. Our free debt advice and support service will help you find out what is best for you.

We will look at your finances and anything else that is making it harder to manage your money. Get started online and we will guide you through.

What is a good budget example?

A good example of a budget that works is one that lists everything. It should detail everything that you::

  • Need to spend each month
  • Get in your pocket each month
  • Need to cover from time-to-time through the year

It is important your budget is real. Our budget planner template is a good example of how to make a budget.

How can I create my own budget?

3 steps to building a budget that works

Follow our step-by-step guide.

  • Step 1. Work out your total income
  • Step 2. Work out your living costs
  • Step 3. Work out what you need to cover spending and repayments

If helps to have your statements or online banking to hand and some recent bills or receipts.

Step 1: Adding your income to your budget

You need to:

  • Enter your wages, benefits, pension and anything else you earn
  • Only list the amount you actually get. This means after any tax or National Insurance has been taken away

  This will be the Net pay listed on a payslip. We can help you turn this into a monthly income.

I am paid weekly:

  • Multiply it by 52
  • Then divide it by 12

So, if you are paid £500 a week.

  • This would be: 500 x 52 = 26,000
  • Then 26,000 ÷ 12
  • That works out as £2,167 per month

I get different wages each month:

If you have all your monthly income for the last year:

  • Add it all together
  • Then divide it by 12

If you only have the last three months:

  • Add these three months together
  • Then times by four
  • And divide that by 12

Step 2: Adding your spending to your budget

You might find it easier to use the annual amount, this is the bill for the whole year, and then divide (÷) it by 12.

It helps to start with your most important bills. These are the things you must spend money on each month, such as:

  • Mortgage or rent
  • Council tax
  • Gas, electricity and water
  • Insurance

Find out more about what bills to pay first.

Next, write down what you usually spend on living costs.

  To help work out this spending, you could:

  • Look through recent statements showing the money going out of your account
  • Check any recent receipts

It can help to round up a bit to make sure you have covered what you need to spend.

Now you need to include things you pay for less often. These are things like:

  • Christmas and birthdays
  • Holidays
  • Car repairs
  • Vet's bills

Step 3: Take away what you spend from your income

  • If you have any money left after everything is paid for: This is called a ‘budget surplus’
  • If you spend more than you have coming in: You have a budget deficit'

If you have a budget deficit, we can help you with:

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Need help making a budget?

We can make a budget for you.

Get help online now