Creating a Budget

Posted 3 years ago

A budget is a plan for your money

You map out your income and your expenses, make sure it all balances, and then you just have to stick to it. 

When you’ve got a budget, you’ll have a better idea how you’re tracking. You’ll know how much it takes to make ends meet, and you’ll have the peace of mind that comes from being prepared. You’ll also find it easier to make adjustments to your spending, if need be, because you’ll have a clear overview of where your money is coming from, and where it’s going.

Here’s some advice for creating your budget: 

Set aside an hour or two It’ll take about that long to set your budget up for the first time.

Figure out what length of time your budget is going to cover: weekly, fortnightly, or monthly It can be helpful to keep a budget based on how often you get paid, but if your money comes in lump sums from student finance or other less frequent payments, it might be best to keep your budget monthly. Any longer and it becomes more difficult to deal with. 

Write out your income and your expenses  If you’re keeping a weekly budget, write down how much you have to spend that week — or for the fortnight, or the month, if you’re keeping a fortnightly or monthly budget. Write down what expenses you have to pay in that week, fortnight, or month.

Break big expenses down into “chunks” For big expenses that you pay less frequently, break them into smaller “chunks”. List the “chunks” as weekly, fortnightly, or monthly expenses. Put that amount aside each time, so you have enough to cover the expense when it comes.

Compare your income and your expenses to find out if your budget balances  If your total expenses are equal to your total income, then your budget is balanced. If your income is higher than your expenses, you’re in surplus — but if your expenses are higher than your income, you have a deficit. If you have a deficit, you might need to find ways to reduce your spending, like eliminating unnecessary expenses, identifying cheaper alternatives, or looking into ways to increase your income. If that still doesn’t help, you might need to look into what kind of assistance is available here

There are a lot of different ways to keep a budget, like the envelope method, the 50/30/20 budget, and others. For more information about how to create a budget and how to stick to it, sign up to Blackbullion and check out their Budget decision tree article. There are loads of free budgeting apps to help too!

You can see some more advice on looking after your money here.