Budgeting is the process of creating a plan to spend your money.
Creating a spending plan allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do.
Having a plan includes:
- Drawing up a budget
- Deal with your debt
- Looking for ways that you can reduce your spending and/or make your money go further
- Thinking of ways to increase your income
Drawing up a budget
A budget is nothing more than a list of:
- All your income (money coming in to you) and
- Spending (money you pay out).
Most people do not realise how much they actually spend. It is helpful to write down all of your incomings and outgoings.
Do not forget things you spend money on that don't happen every week or month for example that may come out only once a year
The next step is to divide outgoings into essential and non-essential items.
Essential items are things you cannot do without such as:
- Council Tax
- Gas and electric
Non essential items include:
- Sky subscription
- Gym membership
- Tobacco and alcohol
- Even the daily coffee you buy
If you have enough money coming in to cover all your needs you may still want to look at ways of reducing your spending or improving your income to allow you to build into your budget things like savings.
If your spending exceeds your income then you will need to act to reduce your spending or increase your income.
In some cases this will be because you have debts that have become unmanageable, there is help available to help you restructure your debt to make the payments more manageable in your budget.
Dealing with your Debt
It can be hard to know where to turn, but you can find free, confidential help and advice online and locally. There is no need to use a fee charging debt management company. The Money Advice Service website will show you where your nearest advice centre is.
Take the debt test to work out and determine your level of debt and see how you can get back on track with your finances.
It is important that you deal with urgent debts linked to essential supplies and services such as mortgage or rent arrears or utility debts like gas, electricity and water.
If you cannot pay your Council tax instalment by the due date shown on your bill or if you are having difficulty paying, do not wait, please contact us on 0191 553 4388 to make a payment arrangement.
Find further information on advice via the debt and money advice link
It's not always easy to notice when someone you know is having money problems or is in debt. Often when people have money worries they hide them due to embarrassment or to protect their family. Or perhaps they just don't realise the severity of the situation - or want to admit it. But you can spot the clues.
Reduce your spending
If your essential payments have been identified and are being met and your budget still doesn't work then you first of all need to think about reducing or removing non-essential spending
Here are some ideas about how you could do this
- Go shopping with a goal in mind
- Don't get sucked into sales
- Leave your credit cards at home
- Eat at home and bring your lunch
- Consider cheaper childcare options
- Comparing deals on mobile phone, broadband, satellite TV and credit cards, as well as energy bills, it could save £100s each year
- Switch providers - its easy to do
Find out how to reduce your spending via The Simple Dollar website
Find further information on saving money via the Money Saving Expert website
You should try to pick the best deal before agreeing a contract with a provider.
For further information about finding the best deal, the following link might be helpful: USwitch website
I want to know the cheapest ways to pay my household bills
Some utility companies give a small discount for customers who pay within a few days of receiving their bill. Most also give better rates if you pay your bills by direct debit.
Paying by Direct Debit
Many energy, water and phone companies will give you a discount if you pay your bill by direct debit and therefore this is often the cheapest way to pay. A direct debit is an agreement between yourself and your bank. It gives your bank the power to allow an organisation like your gas company to take a regular payment from your account.
Direct debits can be handy for energy bills because they can spread the cost throughout the year, making bills easier to budget for.
To set up a direct debit, you will usually have to sign a direct debit agreement. However, some companies can do this over the phone or online.
Signing a direct debit gives the organisation the power to vary the amount of money that they take from your account each month. However, they must give you ten days' notice of this and you can stop a direct debit from being taken out of your account.
Be careful using 'free' phone numbers
Many energy, utility and broadband companies have a free phone number for customers.
The call will often only be free if you call using a landline. You may be charged if you use your mobile to make this call. The call could be quite expensive as it will often not be included in any free minutes in any pay monthly phone contract.
So, use your landline to pay bills or pay your bills online through your supplier's website or through internet banking.
Make your money go further
There are many useful tips, advice and information to help you make the most of your money:
- Drive for less
- Counting the cost
- Saving money at home
- Shopping smarter
- Free family days out
Increase your income
Finding work provides us with money to support ourselves and gives us the means to develop ourselves; working also gives us a sense of pride, identity and personal achievement;
Increasing your hours may also be worth looking at, maybe speak to your employer.
Looking for work, the following link might be helpful: careers advice; jobs and job vacancies; help and benefits when looking for work; training and development opportunities
If you find work - this may lead to you being entitle to additional benefit & tax credits
There are lots of other ways to boost your income here are some examples
If you would like further information, you may find the links below useful: