How to set up a budget
The first step to taking control of your finances is doing a budget. It will take a little effort, but it’s a great way to get a quick snapshot of the money you have coming in and going out.
Setting up a budget means you’re:
- less likely to end up in debt
- less likely to get caught out by unexpected costs
- more likely to have a good credit rating
- more likely to be accepted for a mortgage or loan
- able to spot areas where you can make savings
in a great position to save up for a holiday, a new car, or another treat.
What you need
To get started on your budget, you’ll need to work out how much you spend on:
- household bills
- living costs
- financial products, like insurance, bank charges or interest
- family and friends, this could include gifts, travel to events like weddings
- travel, car costs like fuel and MOT tests as well as public transport
- leisure, including holidays, gym fees, meals out or other entertainment.
Getting your budget back on track
If you’re spending more than you have coming in, you need to work out where you can cut back.
This might be as easy as making your lunch at home or cancelling a gym membership you don’t use.
You could also keep a spending diary and keep a note of everything you buy in a month.
Or, if you do most of your spending with a credit or debit card, look at last month’s statement and work out where your money is going.
Get everyone involved
Get everyone in your family involved with keeping to a budget.
Sit down together and make a plan that you can all stick to.
Work out how much spending money is available and agree between you what you’ll each have.
Cutting your household bills and your mortgage
For many of us, household bills make up a large chunk of our spending. Life is unpredictable so try to review your budget and your spending if there’s a change, or at least every couple of months.
You might get a pay rise, which means you can save more, or you might find your household bills increase.
The good news is that it’s easy to save hundreds of pounds on your bills by following our tips.
You can also save hundreds and even thousands of pounds by shopping around for a new mortgage, or reviewing the one you already have.
