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How to draw up a budget – getting to grips with budgeting

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If you find you run out of money at the end of the month – or week – it’s worth drawing up a budget. But getting to grips with budgeting can seem a bit baffling at first. But it’s a good way of taking more control of your money. Find out how to draw up a budget.

How to draw up a budget

A budget lets you set out how much money you have coming in each week or month and how much you spend. It records your income, which may be made up of bonuses or benefits as well as your wage or earnings.

SAVVY TIP: Let’s face it, budgeting is something else that rarely sets the pulse racing, but it’s a really good way of working out how much money you have to spend each month. It’s also a great step towards taking control of your cash.

First steps with budgeting

If you’re spending more than you can afford (i.e. more than you earn or enough to stop you from doing thing like starting a savings account) you’ll need to work out a budget or money plan.

Here are the steps to take:

Step 1: Download a budgeting app, get a notebook or use a spreadsheet. I’ve listed a couple of websites and apps at the bottom of the article.

Step 2: Write down the money you have coming in. Include your wages, state benefits, pension, child support or rental income. Don’t include anything that’s not a regular payment (such as bonuses that aren’t confirmed until you receive them!).

Step 3: Write down a list of all your outgoings or fill in the information on the app. If you’re using an app, it will probably allocate categories for your spending. Otherwise, use a budgeting template to get a list of categories. You’ll need to separate out things like spending on your home and bills, travel, food, etc.

Step 4: Add up how much you are bringing in and how much you’re spending. Hopefully you’ll be spending less than you bring in. But if you’re not, that’s when you need to use your budget to improve your money habits.

Balancing the budget

If you don’t have enough money coming in to pay all your bills and cover food and travel costs etc, you’ll have to find ways of making cutbacks. It might mean a change that’s relatively painless such as buying fewer clothes, socialising less or it could involve more drastic cutbacks.

Budget cutback ideas

Small steps can make a difference. Try these and see how much you can save:

1. Eat at home more, go out less. The BBC website has recipes and tips.

2. Plan what you’re going to eat so you don’t throw food away. Log onto to download a menu planner.

3. Don’t go to a supermarket without a list — or if you shop online, compare prices to get the best deals. Try mysupermarket, which is a price comparison site for online supermarket shopping.

4. Swap clothes with friends, rather than buying new (called swishing). There are several swishing websites to help you get started, such as

5. Make sure your home keeps as much heat in so you use less. The Energy Saving Trust has a host of good ideas. I’ve linked to the England section of the website, but you can select Northern Ireland, Scotland or Wales.

Saving money without cutting back

The other way of spending less is to pay less for goods and services you use. If you haven’t recently tried to get a better deal on your credit cards, gas and electricity or household insurance it’s probably worth doing.

Help and advice
If you are worried about debts, read up on how you can pay your debts off quickly in the credit cards and borrowing section of the Everyday Money section of SavvyWoman and there’s information on Dealing with debt in the Unexpected Life Events section.

You may need to get in touch with an accredited debt advice charity, such as Stepchange, Citizens Advice or National Debtline.

Useful links: 

Related articles:

How to improve your credit score so you pay less for loans and credit

Five easy(ish) ways to earn extra cash

Using a spending diary

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