If you want to keep your finances on the straight and narrow, drawing up a budget will really help. This page explains what budgeting is, and contains links to useful websites that can help you manage your money.
Drawing up a budget
When you draw up a budget, you add up all your outgoings and all your income, then subtract the outgoings from the income.
The MoneySavingExpert website has a really useful budget planner that you can download and use to help you work out how much you spend and how much you can save (click on the red 'download the budget planner' link).
First of all, consider all your outgoings, that is, the money you spend. Outgoings include:
- council tax
- electricity and/or gas bills (these will vary depending on the size of your home and the time of year)
- child maintenance
- telephone and mobile bills
- childcare costs
- prescription and health care
- travel costs
- food and other household expenses
- television licence
- loans and credit card debt
You should also bear in mind one-off expenses such as Christmas and holidays, and emergency costs, for example, repairs to your home or replacing broken household items such as your washing machine.
The MoneySavingExpert budget planner will help you break down your outgoings further.
The Scottish Government provides a useful leaflet to help you work out whether you are entitled to any help with health costs (for example, dental treatment or glasses).
Next you need to look at the money you have coming in. This could be from:
- benefits (see below)
- contributions from your family.
If you take away your outgoings from your income, how much do you have left over? If you don't have anything, you'll need to look at how much you spend in each area and find out where you can cut down. Is there anything you can do without? Can you save energy in your home to cut down on your gas and electricity bills? The MoneySavingExpert website has lots of suggestions of ways to save money without hardship.
Increasing your income
You might also have to look at ways of increasing your income through work, and by checking whether you are entitled to any benefits. Use the online calculators at EntitledTo to work out how much you're likely to get. Turn2us is another useful website that can help you work out what you can claim.
It's always worth visiting your local Citizens Advice Bureau or welfare rights agency to ensure that you are getting the benefits you are entitled to. Use the Advice Services Directory to find help near you.
When you're working out your budget, it can help to separate bills you have to pay (for example, your rent or mortgage, utilities and council tax) from expenses you can do without (such as gym membership or your satellite TV subscription). If money is tight, you should always prioritise:
- your rent or mortgage - if you don't pay these, you could end up without a home
- council tax - not paying your council tax can result in severe consequences
- gas and electricity - if you don't pay these, your supply will be cut off
- maintenance - if you deliberately refuse to pay maintenance (for example, child maintenance), you could end up in prison.
- You can get advice on benefits from a Citizens Advice Bureau or other advice centre. An adviser can help you work out which benefits you are entitled to and help you make a claim. They may also be able to sort out any problems you have with your claim, for example if it is delayed. Use the Advice Services Directory to find an agency near you.
- Use the Money Advice Scotland website to find an agency offering free, impartial money advice in your area.
- The National Debtline website has lots of useful information on budgeting and dealing with debt, including self-help packs you can download.