Budgeting

This content applies to Scotland only.

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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.

How do I draw 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).

Why should I bother drawing up a budget?

Drawing up a budget is time consuming, and can be quite complicated. However, it's an important thing to do, particularly if:

• you are thinking of moving home and want to work out how much rent or mortgage you could afford to pay
• you are going to change your job, reduce your hours or give up work altogether and you want to know whether you can afford it
• money is tight, and you want to see where you can make some savings
• you are in debt, and need to prioritise your expenditure.
  

Outgoings

First of all, consider all your outgoings, that is, the money you spend. Outgoings include:

• rent
  
• mortgage
• 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
• insurance
• childcare costs
• prescription and health care
• travel costs
• food and other household expenses
  
• television licence
• loans and credit card debt
• entertainment.
  

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.

Our page on household expenses has a more comprehensive list of costs, and the MoneySavingExpert budget planner will help you break down your outgoings further.

Income

Next you need to look at the money you have coming in. This could be from:

• wages
• 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.

You might also have to look at ways of increasing your income through work, and it is 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.

Are some bills more important than others?

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, you could end up in prison.
  

Savings

If possible, set aside some money each month to save in a high interest account. However, if you have debts, it's always better to use your savings to pay them off, rather than to let the interest accumulate.

Where can I get help?

• 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.