Budgeting

Budgeting

Budgeting

Budgeting is simply creating a plan so you know what to do with your money, whether it be paying your monthly bills, paying off your debts, or saving. Creating a budget means you can see how much money you have coming in, and how much of that money you're then paying out.

You can complete your budget and get online debt advice here

If you’ve already completed your budget, the outcome could have been one of the following:

  • You don’t have enough to pay your debts and need a debt solution
  • Your budget reflects that you can afford to repay your debts, but you don’t think this is accurate
  • You are overspending in some areas and need to cut back in order to afford your debt payments, or to enter a debt solution

Overspending

If the outcome of your budget was that you are overspending in some areas, this will have been based on industry guidelines for a household like yours. If you don’t think that you’re overspending, check that you have included all of the members of your household that are financially dependent on you.

If you have adults in your household that have a source of income but don’t contribute anything to the household, you may need to consider asking them to help out with the bills.

If you’ve done a budget with only your income, but there are other people earning in the household, make sure that you are all paying a fair share towards the bills. It’s sometimes a good idea to do a household budget to make sure everything is covered and to give a more balanced picture. It doesn’t mean that the other person needs to be involved in any debt solution you enter.

If you have a particular need for high spending (such as special dietary requirements because of a medical condition), then speak to an advisor who can check that your spending is reasonable based on your situation, and can make sure that this is explained in any proposal/correspondence to your lenders. You can contact us at any time on 01925 599400.

You may also want to consider some of the following:

Food/Groceries

  • Make a food plan and a shopping list
    Plan what you’ll eat for the week and buy only what you need. Don’t shop without a plan or you’ll find yourself with unnecessary waste or incomplete meals, so you’ll need to do a top-up shop for the missing items.
  • Try cheaper brands
    Swap out a few items from your shopping list for cheaper alternatives. See if you can notice the difference!
  • Try online shopping
    Remove the temptation to buy things you don’t need.

Budget doesn't seem right

If you’re struggling to maintain payments, or your budget says that you should have money spare and you don’t, then you’ve probably missed something out of your budget – it’s easily done! Try to think further than just your monthly bills. Take a look at your bank statement and look at the other transactions on there, namely cash withdrawals and debit card payments to see if your budget really reflects what you spend:

  • Top-up shops
    It’s easy to estimate how much you spend on your ‘big shop’ each week, but what about top-up shops for milk, bread etc. throughout the week? These all need to be accounted for. Check your bank account for debit card transactions at grocery/convenience stores, or keep your receipts and add up the total at the end of the month.
  • Under-budgeting/overspending
    If you always find that, when you get to the till, you’ve spent more than you expected, you could consider online shopping instead. That way you can check your cupboards as you shop so you don’t buy things that you already have in, and you won’t be tempted to impulse buy as you browse. You can also limit your spending. If you finish your shop and find that you’ve gone over your budget, take out anything that you don’t need. With some supermarkets, you can even collect for free if you place your order a couple of days ahead.
  • Use cash
    It’s easy to lose track of spending when using contactless or card payments. A lot of small transactions can quickly spiral. If you use cash, you are more aware of what you’ve used and what you have left. Just make sure you know how much you have and how long it has to last you.
  • Be disciplined
    Just because you’re trying to cut back doesn’t mean that you can’t have any of the things you enjoy. You can still have a take-away, or a meal out, but make sure these are an occasional treat - once a month - rather than the norm. You may even find that you look forward to them more if they are less frequent.
  • Don't impulse buy
    If you see something that you want, don’t buy it straight away. Look around to see if it’s cheaper elsewhere. You may even find that, once you’ve pondered it for a while, you no longer want or need it after all!
  • Switch
    When your contracts/deals are up, switch to a new provider. Don’t let them just renew automatically unless you know you’re getting the best deal possible. If you stay with the same provider for an extended period, it can end up costing you a lot more in the long-term.
  • Pay by direct debit
    Some providers, such as energy suppliers, give a discount for paying by direct debit. Just be careful not to let contracts automatically renew when you were planning to switch, for example car or home insurance.
  • Check what you're paying for
    Look at the direct debits and recurring payments that come out of your bank account. Do you need and use all of the subscriptions that you pay? Could you cut down on the number of TV subscriptions, or get a cheaper package? Look at the channels that you get and whether you actually watch them. With other subscriptions, what benefit do you get? If you only go to the gym once or twice a month, would it be better to pay-as-you-go?
  • Budget for annual costs
    Budgeting for annual costs such as Christmas, car service, or school uniform, is only half the story. You need to separate this money from your main account and leave it there until you need it. If you have an account with ‘pots’ you can name them and designate the money for a specific purpose. Otherwise, put it in a separate account and keep a log of how much is in there and what it’s for. Don’t be tempted to use it for any other purpose.
  • Is it really a deal?
    Consider whether the benefit lives up to the appearance of a good deal. For example, 3 for the price of 2 or BOGOF deals are only a ‘good deal’ if you needed them anyway. Don’t be lured into buying something you didn’t plan on buying just because it’s on offer. Check individual unit prices to see how much cheaper, if at all, the offer price is than the alternatives that are available. Where subscriptions are concerned, check whether their introductory offers e.g. ‘First 3 months free’ actually work out any cheaper over the full year, and be sure to shop around before renewing.
  • Cutting down
    Whilst you may be aware that your smoking habit is costing you a fortune, it’s not something that you can just give up. However, would it be possible to buy one less packet a week (equivalent to 3 cigarettes a day) than you would normally buy? Over the course of a year this could save you upwards of £500.
  • Think about the small things
    Spending £4 on a coffee, breakfast, or sandwich for lunch never seems that much at the time, but if you do that every day, it soon mounts up. £4 per working day for a whole year equates to over £1000. If you made your lunch at home, or skipped the morning latte, you could save a significant sum.