Budgeting Advice

Creating a Budget

If you are struggling to make ends meet or have been impacted by the recent changes to welfare benefits you may wish to look at where you are spending your money and try to make a few changes to reduce your expenditure. The information below should help you to create a budget to show where you are spending your money. The Money Advice Service has an online budget planner that can help you create a budget. It also provides advice and information on reducing expenditure.

A budget will allow you to keep track of how you are doing financially. It will give you an accurate picture of your situation and allow you to make decisions about your money. It will help identify any changes you can make to your spending habits if you are over spending and help make your money go further by getting in to a savings habit if you have anything left over.

To create a budget you need to know what money you have coming in from wages, benefits and pensions and then what money you are spending on things like rent/mortgage, council tax, household bills, shopping and debt repayments.

You need to include all of your expenditure, remembering things that are paid for on an annual basis, e.g. Car tax, birthdays and Christmas.

To ensure your budget is correct use either weekly or monthly figures for your income and expenditure.

• To convert annual amounts to monthly amounts divide by 12 and by 52 to get weekly amounts.
• To convert a monthly amount to weekly: multiply by 12 and divide by 52.
• To convert a weekly amount to monthly: multiply by 52 and divide by 12

Once you have created your budget and done the calculations it will show you how much money you have left over at the end of each month. It may also show that based on your budget you are spending more than you have coming in each month. If you have more going out than coming in don’t panic. There are things you can do and advice available to help improve your situation. Please see here for more information.

Priority Payments
Whatever your budget shows, it is important to remember to pay your important bills first. These payments, known as priority payments, are those which if not paid can lead to serious consequences. These payments include:

• Rent/Mortgage—you may lose your home if rent/mortgage is not paid.
• Council tax—if you do not pay your council tax, your local authority may take action to instruct bailiffs; arrange to have money deducted from your income. In extreme circumstances you can be sent to prison for not paying your council tax.
• Gas/Electricity—If you do not pay for your gas or electricity, your supplier may disconnect your supply or fit a pre payment meter
• TV Licence—if you watch TV, it is a criminal offence to watch without a licence. You may receive a magistrates' court fine for non payment
• Magistrates' Court Fines—Non payment can lead to bailiffs being instructed, money being deducted from your income or imprisonment.

More information on priority payments can be found here.

Maximising your income
If you are on a low income or in receipt of benefits you may not be claiming all of the welfare benefits to which you are entitled. You should check that you are not missing out on additional income. You find more information on benefit entitlement checks here.