Creating a budget can be a challenge, especially when you have more important things on your mind. However, a budget can actually help you feel more in control of your situation and can help relieve the worry you may be feeling in the face of added financial pressures due to you or your partner reducing work hours and travel costs to and from hospital.
Where does your money go?
There may be incomings, outgoings, priority debts, unexpected payments and day-to-day living expenses to consider.
It's a good idea to look at how you spend your money and find ways to cut down on non-essential spending, especially when finances are stretched. But where do you start and how can you make sure you stick to a budget?
Making the most of your money
If you underestimate your real spending and forget many of the essential items you need, it's going to be hard to make your budget work and you could end up getting into debt.
Sometimes we are so used to doing something in a particular way that it's difficult to break habits and approach things differently.
By writing everything down you can see if the way you spend your money is effective and find alternatives that won't cost you as much.
One example could be to switch to a cheaper gas and electricity provider. Make sure you check if there are any exit fees before you do.
Using an online budget planner
There are a large number of budget tools and calculators available online and most high street banks will have one on their website. Budgets can differ in terms of what information you need to fill in, so it's a good idea to check a few out before deciding which one to use.
We've found some of the best ones for you:
- Citizens Advice Budget Tool
- The Money Advice Service Budget Planner
- Money Saving Expert Budget Planner
Your income, expenses and debts
Before (or instead of) using a budget calculator you may prefer to do some old fashioned number crunching and write everything down on paper. This way you'll be less likely to miss out on anything important and can refer to it at a later date.
It will also help you to have pay slips, bank statements and utility bills to hand. You will need to consider the following main areas:
- Your income: this includes your salary, any benefits you receive, contributions from friends and family or Child Maintenance. You may also want to list one-off payments, such as inheritance or tax rebates.
- Your expenses: your general bills and outgoings, priority and non priority debts and payments.
- Your debts: credit card or loan repayments.
Breaking down your expenses
To get you started, here is a general list of the main things to consider when working out how to manage your money, pay off debts and start saving. It's also worth knowing that some energy providers will offer lower tariffs if you are claiming certain benefits.
You may want to add others to the list below depending on your needs.
- Housing costs: mortgage, rent, mortgage protection insurance, mortgage endowment, life insurance, service charges, house repairs/improvements.
- Household bills: gas, electricity, water, Council Tax, TV licence, TV and video rental, satellite, internet/broadband, home phone, mobile phone charges, house and contents insurance.
- General living costs: food shopping, snacks, meals at work, clothes, shoes, toiletries, baby essentials (nappies, wipes and so on), alcohol, cigarettes, cleaning products, laundry, pet food, vet bills, pet insurance, prescriptions for yourself (if you have to pay for them - they will be free for your child).
- Employment: pension contributions, tax and national insurance (if you are self-employed), meals/drinks at work.
- Travel: fuel, motor insurance, road tax, MOT, car/bike repairs, breakdown cover, loan/finance agreement, insurance, public transport, air travel, parking, taxis.
- Childcare: childminder, nursery, activities or playgroups, school dinners, school trips, pocket money.
- Leisure and entertainment: gym membership, sports classes, hobbies, eating out, holidays, haircuts, beauty treatments, birthday/celebration presents, takeaways, newspapers and magazines, lottery/gambling, music, film, meals out.
Updated July 2016, next review due 2017.