Tips for making a budget

We’ve shared our budgeting tool with you to help you get started.

This budgeting tool is designed to account for all your potential income and outgoings, so you can see exactly where your money is going. Then you can start to look for ways to free up some cash each month. For help using it, watch the video in our latest email and read our tips below.

Before you start

If you’re not used to dealing with spreadsheets – don’t panic. This tool is really quite easy to use! But if it just doesn’t work for you – maybe you can’t use it easily on your device, or you just don’t find it easy to read – you can find similar tools online, for example via the Money Charity or use a budgeting app – such as Emma. If all else fails, then a pen and paper is good too!

First you need to decide whose income and outgoings you’re recording in this budget. Is it just for you or for your whole household?

The more accurate this budget is, the more it will help you. If you can, it’s best to use your bills and statements to record your exact income and spending, rather than guessing.

Your income

Read down the first column, and for every row that applies to you, enter the relevant figure in the second column. Then make sure the third column is showing the correct frequency. For example, in the ‘take home pay’ column, if you receive £800 every fortnight, enter ‘£800’ in the second column and use the drop-down menu to select ‘fortnightly’ in the third column.

Your spending

Then start inputting what you spend in the same way. There are several categories, so have a good look through to make sure you include everything that applies to you. (There are likely to be some rows that won’t apply to you, both in the income and spending sections – so just leave the ‘figures’ column blank for those rows.)

Be honest with yourself about your spending. Why downplay something only you will see? It’s always tempting to budget for the amount you think you should be spending on takeaways, treats for the kids, your social life or even groceries…but remember, your budget is for you. The real you, not the ideal you! Use receipts and bank statements to make sure your budget reflects a realistic picture of your spending.

Don’t forget to include costs that only come up annually, or every now and again, like school uniforms, your MOT and gifts at Christmas, Birthdays and other occasions. The budgeting tool will convert all the figures to a rounded monthly amount. You’ll then need to put this money aside each month until you need it. See our blog on setting savings goals for more about how to do this.

Also don’t forget to include cash withdrawals – and how you spent them!

Credit cards and other debts

Include any spending you do on credit cards, store cards etc – it’s still expenditure!

Also include any repayments on loans, credit cards and other debts. Try to include an accurate figure for how much you pay off your credit cards each month, whether you make minimum payments, pay in full or just pay off as much as you can. Have a look at our tips on how to deal with your debt (and the signs that you might have a debt problem).

Saving

If you are already putting some money aside each month as savings – yay! – you can record it here. Again, be honest, if you transfer the money into your savings at the start of the month, but tend to spend it by the end, then leave this section blank!

Then what?

At the bottom of the table you will see your total income, total spending, and your ‘magic number’. This is the amount of money you have left over – and available to save – after all your spending. Don’t panic if your magic number is negative – we’ll show you how to tackle that.

On the second tab of the budgeting tool, you can see an overview of your spending. This is the really important part of making a budget. Where is all your money going? Could you be spending less on bills? Are there other areas of your spending where you could cut back?

The third tab on the sheet isn’t strictly part of your budget. But it is a useful place to record any debts you have: how much you owe, what the repayments are and what the interest rate (APR) is on each of them. Generally speaking, its best to pay off the borrowing with the highest APRs first.

Remember, sorting out your budget isn’t just a one-time thing. To get the most out of this tool you need to check it every month, and make any adjustments if necessary, to make sure it’s still working for you.

 

For more tips about successfully making a budget, head to our Facebook page or Instagram to chat with us and the community.