What is budgeting?

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Good personal budgeting is all about managing your money well. It can help you to live within your means, not spending more than you have coming in and only using credit for borrowing which you can afford to repay. It can also help you to start saving or to pay off any debts.

Steps to take in preparing a budget:

  1. Take note of your debts
  2. Keep a spending diary
  3. Develop a budget sheet
  4. Plan your spending

Take note of your debts


If you have loans or owe money on credit cards it usually makes sense to pay off these debts first as you’ll usually be paying interest. As part of your budget, you need a plan to pay off your debts. If you can’t afford to repay them all, start with those that charge the highest interest rates.


Collect together all your paperwork, take time out and make a list. Include information such as: those you owe money to, the amount owed, repayment details and key dates.


This will help you see the bigger picture and have a more realistic idea of your finances.

Keep a spending diary


It gives you an accurate picture of what you spend your money on.


Over a period of at least a week but preferably a month or more, note down everything you spend, including the smaller amounts. It may be helpful to also note ‘how’, as it is easy to forget cashpoint withdrawals or contactless payments. Keep receipts and Cash Withdrawal slips to help you note everything down accurately. If you buy items online you will often get an email confirmation.

Budgeting-1You can keep track of your spending by:

  • writing down what and how you spend in a notebook
  • making a note on your tablet or mobile notebook feature (or other smart device)
  • using an app


You might be surprised at how much you are spending and what on! Your diary may help you see ways you could spend less.

Develop a budget sheet


To help you manage your money and be in control.


The best way is to create a budget sheet. You can do this online or on paper. Work out and list all of your income (salary, benefits and any other payments in) and then your outgoings (money you pay out), both home (rent, mortgage, council tax, utilities, insurances, telephone and internet, TV and so on) and personal (food, drink, travel, childcare, clothes, toiletries and so on). Remember to include everything, as the little things can add up. This is where your spending diary will be useful! You may need to take into consideration the income and outgoings of a partner if you have one, any joint account holders on your account or others in your household. Also, don’t forget to save an amount for emergencies! Similarly, if you are self-employed, remember to allow for any tax liabilities.


When you total all your monthly income and also your monthly outgoings, you will have a clearer picture of how you are doing financially and what you are spending your money on. Balancing your income with your outgoings helps you see what money you have available.

You can also identify your ‘priority’ spending: what you spend on the essentials (food, rent or mortgage, utility bills, insurance, etc) and where you can spend less on non-essentials. Developing a budget can help you to stay financially focused and spend wisely!

  • Online budget planner
    Use this great online budget tool from the Money Advice Service. It only takes five minutes to complete.
  • Budget sheet
    You can print this off to help you develop your budget.

Plan your spending


So you can stay in control and avoid any unnecessary expense or nasty surprises.


  • It’s always wise to do a bit of forward planning for special occasions such as Christmas, a family wedding or summer holidays.
  • Plan for big purchases and consider various options for paying.
  • Try and save first. If you have a big event or large purchase to budget for, put steps in place to save regularly in advance.
  • Think before you buy. Check out review and price comparison sites.
  • Review your spending and budget regularly.


In time you will realise how empowering it is to be in control of your spending, rather than it being in control of you. Circumstances change, life happens! If you are on top of your finances you will be better prepared to deal with the challenges that come along.

Am I missing out?

Billions of pounds of benefits go unclaimed each year – could you be entitled to something which you’re not getting?  This is especially important if your circumstances have changed recently. In addition there are many grants available to help with energy saving, educational, welfare, personal development and other expenses.

Check out these great free tools – simply answer questions anonymously and find out if you are missing out.

entitledto.co.uk turn2us.org.uk


Whether you’re putting some money aside for a rainy day, saving up for a special occasion or looking out for your long-term future, getting into the habit of saving can put you in control. So how much can you save and what’s the best way to do it?



Saving is a personal decision, and how much you save and when will depend on your goals. You might save for special occasions like holidays, birthdays and family events. Many people save for long-term goals like retirement or their children’s education. And having some emergency savings can make a real difference if something unexpected happens, like redundancy, illness or when you have to pay for unexpected repairs to your home or car, or need to replace domestic appliances.


Even small amounts add up, so try to get into the savings habit. Your budget sheet and spending diary will help you decide how much you can save each month. The easiest way to save is to pay some money into a savings account regularly. It’s worth setting up a standing order if you can, so that the money goes straight from your bank account every month without you having to do anything. It’s a good idea to make it for as soon as you get paid, rather than at the end of the month.

Find out more about the types of saving accounts there are available:

Choosing an account

Savings calculator

Use this great calculator from the Money Advice Service to see how long it will take you to save a specific amount, or how much needs to be saved regularly to have enough by a certain date.

View now

Money health check

Free online financial health checker tool from the Money Advice Service. Get a clear picture of where you stand with your finances.

View now

Top budgeting hints and tips

1. Prioritise

Put essentials first, then check if there are ways to pay less.

2. Focus

On a day-to-day basis, try and stay focussed. Try using only cash so that you can’t impulse buy, indulge in some retail therapy at lunchtime or over-spend on a night out. If you are going food shopping, make a list and stick to it.

3. Needs and wants

Before spending, try to stop and consider if you really need it at all. If it’s a big purchase, try sleeping on it: don’t rush into a quick decision. Work out the amount of hours you would need to work to pay for it, you might be surprised. Do you really need it, or just want it?

4. Remove temptation

If you struggle to control your spending, change the way you think and act. Only go shopping when you have to buy something you need. Know your own trigger points: don’t food shop when you’re hungry, or clothes shop when you are feeling down.

5. Shop smarter

When looking to buy anything check out online reviews or best buy tables. You can also look for better deals for your energy needs or insurance by using an online comparison tool, for example. And don’t forget the benefits of online promotional codes, loyalty cards, vouchers and coupons.

What next

How to take control of your finances

Discover how to get to grips with managing your money and finding the right balance between what’s coming in each month and how much is going out.

Get the saving habit!

Whether you’re thinking about a summer holiday, buying a new car, or saving for a rainy day, this short film looks at some of the ways you can get there.