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making a budget

A personal budget is an essential tool to help you manage your money.Your personal budget will help you see how much money is coming into your household, how much is going out and how much you have left over.

“Your personal budget will help you to manage your finances and plan your future spending based on what you can afford.”

If you are in debt, personal budgets are essential in helping you determine what you can afford to repay and how long it will take you.

You can get help creating a budget and receive money advice online by completing StepChange Debt Charity’s free online tool Debt Remedy.

It’s as easy as 123

If you are in debt, personal budgets are essential in helping you determine what you can afford to repay and how long it will take you.

step 1 – work out your income

step 2 – work out your spending

step 3 – work out what money you have left over

Step 1 working out your income

The first thing to do is write down what money you have coming in each week or month. Only include guaranteed income so that you are not relying on money coming in that you might not get.

Step 2 working out what you spend

Write a list of everything you need to pay out. It is important to be honest about how much you spend.Some of these expenses will be things that you pay for once a year, so divide the amount by 52 or 12 depending on whether you are doing a weekly or monthly budget. You should also note down smaller expenses that can add up, for example: newspapers, snacks, lottery tickets, children’s pocket money, cigarettes etc.

It is a good idea to set aside some money each month which you can save. This will help you to budget for things like Christmas and birthdays, large electrical items, new furniture, or even a rainy day. These savings however small, will help you to avoid debt in the future.

Things to consider include:

  • Rent
  • Gas/electricity bills
  • Water bills
  • Council tax
  • Insurance payments
  • Food/household items
  • Car (including MOT, tax, insurance, petrol)
  • Travel expenses
  • TV licence
  • Telephone/mobile bills

Step 3 working out what you have left

When you’ve finished your budget you will hopefully see that you spend less than you have coming in.

Check it! Spend a couple of months checking what you actually spend; it may be a little different than the budget you worked out.

If you are spending more than you earn you will need to look at reducing the amount of money you spend on non-essential things, or whether you can increase your income.

Top Tip

Set up Direct Debits for regular bills. This will ensure your bills are always paid on time which can prevent late payment charges.

You are not alone

For more information and advice contact:

StepChange Debt Charity

They operate an anonymous debt helpline - call 0800 138 1111 (Mon-Fri 8am-8pm, Sat 9am-4pm). Alternatively visit their Debt Remedy to get anonymous help and advice click here fo free debt and budgeting advice

The Money Advice Service

Telephone 0300 500 5000 or visit www.moneyadviceservice.org.uk

The National Debtline

Telephone 0808 808 4000 Monday to Friday 9am-9pm and Saturday 9.30am-1pm, or visit www.nationaldebtline.co.uk

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