From one budget, to another
Written by Lizzie Marlow on 2 March 2021The 2021 Budget is a time for government to set out their spending plans for the year ahead. But, much like the rest of the year, the nation’s ongoing health and finances crisis is likely to take centre stage.
So, to help you take back control, we’ve dedicated the whole of March to help you truly understand your own budget. Today, and for the rest of the month, we’ll be sharing interesting stories from our clients about their journey to financial empowerment.
Let’s start with how you can create your own budget today.
How to budget in five steps…
1. Know your budgetsA budget shows you where your money is being spent and what money you have left over each month.
You can work out a personal budget (just for you), or a household budget. It’ll depend who you live with, and how you split earnings and bills. You might hear some people call a budget an income and expenditure form or an I&E. That’s fine, it’s all the same thing.
2. Choose your budget toolWorking out your budget doesn’t need to be over complicated. In fact, you should work out your budget in the way that comes easiest for you.
Some people like to have an online spreadsheet (like Google Sheets) that they can access on their phone or computer. Others prefer to physically write it out with pen and paper. And there are even a few free apps out there to help you if you’d prefer to go down that route.
No matter what sounds good to you, we’ve got the options for you on our budgeting and banking dedicated page. Download and print out a planner or use our excel planner, which does the sums for you!
3. Get your information readySo, we’ve said this doesn’t have to be too complicated – but your budget should be as accurate as you can make it.
What does that mean? Well, make sure you know how much money you have coming in each month. Have a look at past wage slips, benefit information and any other sources of income. You should also have a look at your previous bank statements to see how much you’ve been paying for bills, food shopping and other regular expenses.
4. Work out your income and expenses in a monthly formatIf you’re paid, or pay certain bills, on a weekly or fortnightly basis, then you’ll need to make sure everything is converted to a monthly period before you start.
This will make working out your budget easier, as it’s no good having your monthly electricity bill in there and weekly wage if they are paid on different timescales. Likewise, don’t forget about the bills that you might only pay every three months (quarterly).
5. When you’ve finished, do a sense checkThink long-term. Your budget needs to be realistic and sustainable. If you’re giving yourself too much, or too little, to spend on certain items – then it’s likely not going to stand the test of time.
This is also your opportunity to look a bit harder at what you’re spending. You need to have enough money to live comfortably, eat well and stay warm. Look out for any unnecessary costs in there too. You might spot that you’re paying over the odds for bills or splashing out on subscriptions that you aren’t using.
If this sounds familiar, visit our section on making the most of your money and reducing your spending to see if you can save money.
Get help if you need it
All this information, and much more, can be found on our free PayPlan Financial Wellbeing Hub. However, if in doing your budget you find that you don’t have enough money to cover payments then you may benefit from free debt advice. Either call 0800 280 2816 or use our free online debt tool to find out your options.
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