Budgeting

Budgeting is vital whatever your level of income and whether you live alone, as a couple or have a family.

Why budget?

gives you a clear picture of exactly what regular sources and amounts of income you have
allows you to accurately list what regular expenses you have to pay out
allows you to plan for periodic, irregular spending such as holidays, birthdays, Christmas
allows you to put money aside regularly into savings which may be needed to help pay unexpected bills, such as replacing household appliances or major car repairs
allows for forward planning in order to achieve money goals, for example, funding a university education for children

How to budget

Using a pre-defined budget templates will ensure that you include all key categories of spending. Credit Action has a range of spreadsheets you can use (listed below) or you can use our Budget Builder, an interactive on-line budgeting tool that not only enables you to input your income and spending but converts items into the correct frequency for you and helps you to allocate which account each item of spending should come from. You can save it and revisit it as many times as you like.

Access the Budget Builder.

Click on the links below to open a spreadsheet template:

Credit Action Student Budget Sheet doc

A 1-page budget template designed for students, to help you get an overview of your finances.

Credit Action Full Budget Pack pdf

A complete and comprehensive guide to preparing a weekly or monthly budget.

Credit Action Personal one-page Budget Sheet pdf · xls

A 1-page budget template to help you get an overview of your finances. Available in PDF and Excel (.xls) format.

Credit Action Personal one-page Budget and Debt Sheet pdf · xls

A 1-page template to help you budget and work out your to manage your debt repayments. Available in PDF and Excel (.xls) format.

Decide whether you should budget weekly, monthly or use a different period that suits you. Most people use a time period that reflects how their main income is paid. So if your employer pays your salary monthly, you will probably find it easiest to budget your expenses monthly.
List sources and amounts of household income and include family members in putting the budget together as ideally, it should reflect all income and expenditure for the family unit.
Any expenses that are paid out weekly can be converted to monthly by multiplying by 52 (the number of weeks in a year), then dividing by 12 (months in a year). If you budget weekly and want to convert a monthly amount to a weekly figure, just multiply by 12, then divide by 52.
Priority outgoings should be paid first - these include housing costs like rent or mortgage, Council Tax, utilities, child support payments, TV licence, vehicle finance (HP), court fines, HMRC payments. The reason these expenses are classed as ‘priority’ is that the consequences/penalties for non-payment are more severe. For example, not paying your housing costs can ultimately lead to the loss of your home.
After priorities, allow for ALL other day to day and irregular expenses. We have included sample budget forms which you can access by clicking here (insert link)
When you have itemised all household income and expenditure, and have a realistic budget, use it to plan and monitor your spending so that any necessary adjustments can be made.
If the budget shows there is more going out than coming in, you need to do two things: (a) look at ways of reducing expenditure (this is best done by examining non-priority costs) and (b) look at ways of increasing income. This is more difficult and takes longer, but a starting point can be to check entitlement to Welfare Benefits. Your local CAB can carry out a free Benefits check, also the website www.turn2us.org.uk can be useful. The ‘Turn2us’Helpline number is 0808 802 2000.

When should a budget be reviewed?

A budget is essentially a plan of income and expenditure, and it needs to be reviewed regularly to make sure it reflects any changes, especially when there is a change in circumstances, for example if income or expenses change, for example, following a new job or the arrival of a baby.