DRAWING UP A BUDGET

The word budget can sound like a grey and gloomy word but it's really just a way of balancing your books and only spending what you can afford to. It is actually quite simple to draw up a budget plan of your own and yet this can have a massive impact on gaining control over your spending.

Start with a blank piece of paper divided into two columns marked 'INCOME' and 'EXPENDITURE'.

On one side note the details of your monthly income including any benefits or child support payments that you receive.

In the second column write down all of your outgoings which should include the following:

Mortgage or rent

Service Charges\ Utility Bills \ Council Tax

Buildings and Contents Insurance

TV licence

Life Insurance \ Pension Plans

Transport costs - Car Insurance, Tax, MOT, and Fuel and/or public transport costs

Credit Card, Loans and Hire Purchase Payments

Add these up to calculate your essential expenses.

Then add to your second column spending such as.

Child Care

Food & Toiletries

Leisure Spending - Gym, Clubs, Eating Out, Takeaways

Alcohol \ Cigarettes

CD's, Books, Newspapers & Magazines

Hairdressers or Beauty Treatments

Clothes

Any other costs that you regularly incur

Add these together and make a second subtotal of your everyday expenses.

A third column of occasional costs should be compiled next, including:

Birthdays \ Weddings\ Holidays

Decorating \ Furniture

Prescription Costs \ Dentist

Add these together to make a third subtotal.

Once you have compiled your HONEST budget add your three sub totals together and subtract it from your income. This will give you a much clearer picture of your situation and establish whether your outgoings exceed your income

If there is any money left over either increase the payments on your debt or put some away as savings or as an emergency cash pot.

If, however, your outgoings exceed your income then you must take a closer look at your current spending and see where you can make cut backs or savings. You may not need to make huge changes but there may be small changes that can make a significant difference. Go through your list and be honest and assess where cut backs can be made.

Keep your budget under review and reassess a couple of times per year taking into account changes of circumstances.

  Download our free budget planner