In a nutshell:
Budgeting may seem a bit of a chore but it can help find ways to make your money work better for you and the person you care for.
- What is a budget?
- Things to remember when budgeting
- Budget planning tools
What is a budget?
Budgeting can seem dull and time consuming, but it’s important to do it, especially if you’re managing finances for someone else.
A budget is a record of your financial incomings (e.g. wages, benefits) and outgoings (e.g. bills, shopping), basically the money you receive and the money you spend. It allows you to see what you are spending and work out what you should have left at the end of the month. This is important information especially when applying for credit, such as credit cards or mortgage, as banks will consider your incomings and outgoings when deciding whether you can afford repayments.
Having a budget means you can make more confident decisions about what you can afford and plan for unexpected costs in the future, so you’re not caught short when it really matters.
Things to remember when budgeting
- Do it your way. Use a spreadsheet on a computer or a pen and pad, whatever suits you
- Be organised. Keep all bills, bank statements and receipts so your budget is accurate
- Be honest. Include all your spending so you don’t get a misleading ‘money left’ total
- It’s not a one hit wonder. Keep your budget up to date, ideally monthly, as things change
Budget planning tools
There are lots of easy-to-use tools out there to help you budget, but we recommend ones offered by the Money Advice Service which provides free and impartial financial advice.
Even the more detailed tools should only take ten minutes to complete if you have all your latest bills and bank statements at hand. You can download your completed budget as an Excel spreadsheet.