Here's some advice on how you can prepare a personal budget. It might involve being a bit organised and keeping track of your spending, but it's definitely worth doing!
Why budget?
Budgeting gives you an accurate picture of your finances. It can show you where your money is going, and how much you're spending on what. A lot of times the little things we spend money on really add up, and we don't even notice. A can of Coke a day? That can add up to over £18 a month! A weekly magazine? Another £8-10 a month.
Top tip - cut back calculator
Identify a non-essential item or expense, cut it out for a day, a week or even a month and see how much you save!
Budgeting can show you where your spending habits and your expenses aren't matching up, and possibly where savings can be made.
If you want to make your own budget, follow the steps below. Or you could check out the online budgeting tools by following the links below.
Step 1 - Start with a realistic view
Keep a record of everything you spend over a certain amount of time - a week is good, but a month will give you an even better idea. Write down everything. If you don't want to write it down right away, keep hold of receipts and put them in once a day.
Be honest with your figures. If you're embarrassed about how much you spend on something, write it down anyway. It makes it that much better when you make positive changes and start noticing a difference.
Step 2 - Keep track of what you get
As well as keeping track of what you spend, you need to know what you have coming in.
Note down any money you get from a job, from your parents, or as presents. You may also get some benefits, from an Educational Maintenance Allowance (EMA) or something like that.
Step 3 - Making a budget
The best way to do this is to make one list of how much money you earn each month, and another of what you need to spend it on.
Include things like the following:
- mobile telephone costs (contract or pay as you go)
- transportation
- food and drink
- toiletries or cosmetics
- any courses, classes, or memberships
- magazines or newspapers
- books, cds, and dvds
- entertainment - cinema, going out with friends, etc
- gifts - birthdays, holidays, and other presents that might come up.
Then have columns for each month, and at the end of the month write down what you actually spent in each area. Some might be more than you'd allowed, and some might be less, but hopefully it will balance out.
You might have some expenses that only show up every few months - make a note of these, and how often they occur each year. Then divide them into monthly installments. For example, if you pay for your bus pass every three months, divide the amount you pay by three and write it down in your monthly budget.
Step 4 - Go back over your budget
Look back over your budget every month and see what areas you are overspending in and what needs adjusting. This is a good opportunity to see if you can afford to save any money too.
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