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Money: Budgeting

Thursday 20 March 2014 Info and advice

Learning how to budget is crucial if you want to stay in control of your money. By creating a budget, you can ensure that your outgoings don't exceed your incomings.


Budgeting allows you to organise your finances and achieve your money goals, whether they're as basic as having money left at the end of the month or being able to save for a deposit on a flat or a new car.

More importantly, it prevents you from living beyond your means, which could result in mounting debts. If done correctly, a budget makes it easier to see areas of your life where you could potentially make or save money.

How do I create a budget?

The best way to create a budget is to keep a record of everything so that you know where every penny goes.

We suggest using the following tools:

Sometimes it helps to have two records, one that shows your weekly outgoings, and another that shows your monthly outgoings. Try out the different types to decide what suits you best, just don't mix the two together...

To change weekly figures to monthly figures
Weekly figure x 52 (weeks) divided by 12 (months)

To change monthly figures to weekly figures
Monthly figure x 12 (months) divided by 52 (weeks)

To change four-weekly figures to monthly figures
Four weekly figure x 13 (payments) divided by 12 (months)

Tips for budgeting

  • Spread your money - If you receive a loan, spread it across a period of time rather than spending it all at once.
  • Prioritise - Always make sure bills are paid first. You can change the date you pay your bills so that they leave your account soon after payday. Allow at least three working days in case payday or your bills fall on a weekend.
  • Be disciplined - Cut out luxury spending by not giving in to impulse buys.
  • Stick to it - At first it might seem hard, but budgeting will soon become second nature.
  • Be realistic - Allow for coffee breaks and nights out. Don't forget to factor in unforeseen costs like birthdays, Christmas and unexpected travel home. If you have a car, be mindful of the cost of petrol and repairs.
  • Increase your earnings - Check that your tax code is correct and that you are claiming any tax credits and benefits you are due. Information about entitlement can be obtained from your local Citizens Advice Bureau  or local authority welfare rights office. Information about how to claim can be found at GOV.UK - Benefits .
  • Maximise your income - Providing all assignments are done, consider doing overtime at work, especially in the Christmas and summer holidays.