Budgeting

A budget 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. The amount left over is your disposable income which can be used to pay off your debts or save. If you are spending more than you have coming in, this is known as a negative budget.

You can make your budget on a weekly, monthly or even daily basis depending on your situation. Once your budget has been made, you may see there needs to be reductions to your expenses to help free up some money to help pay off your debts. If you cannot cut these back, it may be a case that you need to find more ways to increase your income.

There are thousands of ways to save money, and often it’s not the big savings which make the most difference.

Saving a couple of pounds a week here and there can lead to much bigger savings over time. For example, buying own brand groceries, switching energy suppliers, downgrading technology packages or walking (rather than using the car or public transport) where applicable can quickly add up. We have other savings tips on our Money Savings Guide and on our Instagram page.

If reducing expenses isn’t possible to improve your budget, increasing income could be the next step.

Easy ways to increase your income could include selling your unused items such as clothing. You can do this for free on apps such as Vinted or Facebook MarketPlace. If possible, you could also look for a second job or ask your current employer for more hours; just a couple more hours a week could help with your debt repayments. If you have a spare room, you could rent this out either short term or long term. The Rent a Room Scheme allows you to earn up to £7,500 per year tax-free from letting out furnished accommodation in your home. You can even use your hobbies to make more money with a side hustle. For example offering your services for gardening, cleaning or sewing items to sell. Blogging is another cheap way to begin making money; you can blog about your favourite topics or product reviews and benefit from partnerships or affiliate links this could lead to.

When using our free online tool for debt advice, we will ask you to fill in a budget. This will track your spending and income to help us better understand what your personal situation is and therefore what debt solution is best suited.

If the outcome of your budget is 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 completed 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.

Don’t forget, if you are creating a budget using our tool and you need other information not to hand to make it accurate, you can save your progress and return at a later date using the account log in.

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. Consider things like:

• Reducing the number of top up shops through the week
• Create a meal plan and shop online to avoid overspending
• Create a Sinking Fund to help budget for payments you know are coming
• Use cash to avoid overspending on card
• Switch providers to find the cheapest rates
• Cut down on unused subscriptions – the gym, streaming services etc
• Save on the small things by taking your own coffee and lunch to work