With a steadily increasing cost of living, it is important for everyone to know how much money they have and how much they need in order to live. For those with debt, this is all the more important as the repayments will have an impact on disposable income. The best way to ensure that there is enough money at the end of the month to cover all essential expenditure is to create a budget.

Budget Planning

Creating a budget plan is not difficult. There are many free templates available online, and it only takes a bit of time to sit down and calculate income versus all outgoings.


The first step in a successful budget plan is to list all expenditure. The best way to do this is too refer to recent bank statements to get a list of regular utility bills, taxes eg council tax, insurance, rent/mortgage, telephone and water rates. Any other regular direct debits and standing orders should also be included at this stage, as well as any loan or credit card repayments. Things like food shopping and other day to day expenditures such as fuel and/or transport costs should be estimated. If medical bills are common, include these as well. It may also be worth considering occasional expenses such as the Christmas or birthday budget. It should be fairly straightforward to calculate the average monthly spend based on this information.

Monthly Income

Calculating monthly income is the most straightforward. Salary, allowances such as child tax credit, income from a lodger and so on should all be included. If an individual has an irregular income, for example a commission based salary, it is best to try to average out the amount over the course of twelve months.


Hopefully, when the monthly expenditure is deducted from income, there will still be money left over. However in many cases, there may be a shortfall. If this is the case, it is clear the individual is spending beyond their means and this will only result in increased borrowing. Should this be the case, then it is important to prioritise the expenses. Things like the mortgage or rent will clearly be at the top of this list, followed by utilities bills and food. Any expenses that are unnecessary, such as satellite television or other non essential services should be cancelled in order to cover the essentials.

Shop around

There are also many deals and offer to take advantage of. It may be worth buying own brand goods such as food and clothes, or go to a different supermarket to take advantage of their offers. Planning for the weekly shop can also be worthwhile. Set a food budget for the week, plan meals and make a list. Try to limit treats to special occasions and think carefully before making any impulse buys.

By carefully budgeting, it is possible to avoid getting into difficult financial situations. There are many free services available to those looking for help, for example the Citizens Advice Bureau, National Debtline and The Money Advice Service.