A budget helps us all avoid debt, pay for things we need and save up for things we’d like to have. It’s a positive way to be money ready, no matter how limited our income.
When we receive benefits, we usually budget every week. But when we start work, or in the future when we all move to the new Universal Credit benefit which will pay benefits direct to us monthly, we need to make our money last the whole month. Budgeting will really help make this change.
Here are the three steps for making a budget. (You can do this using just a pen and paper, or there are some great online budget tools you can use, such as the budget calculator here
Step 1 - Write down exactly how much money you get a week or month
Step 2 - List everything you spend each week or month, like:
- Important things: rent, council tax, TV licence and electricity, water or gas
- Everyday living: food, toiletries, petrol or bus fares
- Other bills: phone, broadband bills, loan repayments
- Less regular things: like haircuts, birthdays, school trips, meals out or clothes.
- Bills you pay less often: a bill you pay every quarter of the year still needs to come out of your weekly budget! Just multiply it by four and divide by 52 to work out the weekly amount you need to save (easy with a calculator!)
Step 3 - Add all your spending up. See if the money coming in covers what’s going out
Money left over? Spend on luxuries or save – a little a week can soon add up. And there are plenty of good reasons to save - watch the video here.
Not enough money? Now it’s time to cut your outgoings on the list. Here are some ideas which may help you to do this:
- Negotiate lower repayments with companies you owe money to
- Switch energy supplier to get a better rate
- Look at ways to cut your everyday spending. We have lots of tips on cutting the costs associated with children, running a car, food, energy, water, Christmas and borrowing [link to relevant articles]
- Write down everything you spend as you spend it so you can be clearer about where the money goes
- Search online for help or advice. Websites have loads of ideas for reducing your outgoings like www.moneysavingexpert.com
If you have little or no disposable income and you’re struggling to find ways to balance your budget, ask for help. You are not alone and many of us need help from time to time.
You can get free advice from the Citizens Advice Bureau. Or, if you’re a Knightstone resident, you can contact our Individual Empowerment Team for help.