If you’re short on money every month, there's lots you can do. Setting up and sticking to a budget is the best way to help you meet your needs and stay out of debt.

Use this guide to budgeting to help you get back in control of your money.

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A guide to budgeting

We explain what budgeting involves and how it can help you.

  • What is budgeting?

    Budgeting is setting up a financial plan that will help you spend less than you bring in. By sticking to your budget you can make plans for your short and long term spending. 

    To many the word 'budget' can be seen to mean spending less but in fact it means spending smarter.

    Think of it as a tool that allows you to prioritise your spending to ensure you have enough for the essentials whilst saving for the nice-to-haves.
  • What does budgeting involve?

    Setting up a budget requires you to work out and write down what you need to spend over a period of time, 
    for example over a week, a month or a year. 
    Your budget should include all your regular expenses, such as your rent or mortgage, your gas, electricity, and water and council tax. When you have worked out your regular costs, look at the amount you spend on other things, the food you eat, the clothes you wear, the holidays you take and the social activities you do. 
    By getting into the budgeting habit you can quickly work out where you're spending money you don't need to and where you can make savings. 
    Setting up and sticking to your budget can take time and a bit of practice but is almost always worth the effort.
  • Why is budgeting important?

    Knowing what you spend your money on
    By writing down what you have to, what you want to, and what you actually do spend your money on will help you understand your spending habits. This is the first step in knowing where you can make changes.
    Setting your priorities
    Few of us can buy everything we want, creating a budget can help you save for your priorities. 
    • Buying a coffee every day or having a summer holiday?
    • Eating out twice a month or paying off some of your debt?
    • Keeping a bit back for Christmas or spending the spare cash on a treat for the kids?
    Having the hard conversations
    It's rare that we all have the same priorities. Creating a spending plan with other members of your family can help you understand each other's expectations. And the conversations you have will help you compromise and make active decisions together, potentially reducing any conflict or stress.
    Planning for the unexpected
    We all have unexpected events that introduce unplanned costs; the car breaks down, you lose your job, you need to take sick leave. Working to a budget lets you plan for the unexpected.

    Learning smart spending habits will stand you in good stead in the future. It’s not just about cutting back, it’s about making the right choices, and shopping around for great deals on things that are important to you. And when you’ve sorted out your finances you may well find your levels of stress and anxiety reduce too. 

Next steps

Being cash positive can help reduce your stress levels, letting you get on and enjoy life. Use our action plan to find out how to set up a budget that’ll set you on a path to managing your spending.