After calculating your budget, you will either have a positive balance (spare money available to spend) or a negative balance (you don’t have enough to pay for the things you are paying for, and are getting into debt).
You can use online tools to calculate your budget, using your income and outgoings figures. This will give you a more accurate budget, as some payments may be weekly, some monthly and some quarterly. The Money Advice Service has a free online Budget Planner.
Budget sheets are useful tools that help you manage your income and stay out of debt. Creating a budget is important for everyone, and can give you freedom and peace of mind since you know exactly where your money is going.
To create a budget sheet, write down your outgoings (all the individual items you spend money on in a week or month, one per line: if you pay for it, include it) and your incomings (all the money you have coming in). You can sum the outgoings to see how much you spend each month.
There are 4 steps to successful budgeting: fill in a budget sheet of all your incomings and outgoings, calculate your total incomings and outgoings, take action to change it if you need to, and regularly revise it.
Budgeting will help you keep track of money going out, avoid spending money that you don’t have, deal with debt by planning repayments in a way that you can manage, work out how much (if any) money you can save, and decide whether you can afford to buy something that you would like.
If you add up what you spend and discover that your outgoings are higher than your income, you need to find ways to reduce what you are spending.
A budget is a plan detailing how you spend, based on how much money you have coming in and how much you need to pay out. This means looking at your income (the money you are receiving) and your outgoings (the money you are spending), and making sure you have more coming in than going out.
It can be satisfying to feel in control of your money, and perhaps to watch your savings grow. Saving even small amounts of money as regularly as you can will help give you the security of knowing that you have some you can use if an emergency arises.
Managing your money effectively means not paying more than you should for something, it helps you keeps things simple like automatic payments, and enables you to plan ahead such as booking a holiday in advance when you know you’ll have enough money to pay for it and take with you.