Budgeting

Budgeting can help you manage your money better. Financial difficulties can make your mental health worse, so here is some practical guidance to help you budget effectively.

Budgeting can help you:

• Work out what money you have coming in and going out
• Stay in control of your money
• Set aside money for household bills
• Save and plan for the future
• Work out how much you can afford to pay if you owe money

How do I work out my budget?

Here are the first steps to take…

Step 1 – Work out what money you have coming in (e.g. wages, benefits, pension).

Step 2 – Work out what you spend your money on (e.g. household bills, food, clothing, travel, hobbies).

Step 3 – Look at the difference between your income and spending to help you work out your budget.

You can work out your budget on paper, or if you prefer you can use free online tools.

Online budgeting tools

You need to decide whether you want to do a monthly budget or weekly budget. If you get your wages or benefits paid every month then a monthly budget might be more useful, but if you want to manage your weekly shopping you can do a weekly budget instead.  

Changing monthly, weekly, fortnightly amounts to fit your budget

• To change weekly amounts to monthly amounts

            Weekly amount x 52 and then divide by 12

• To change monthly amounts to weekly amounts

            Monthly amount x 12 and then divide by 52

• To change fortnightly amount to monthly amount

            Fortnightly amount x 26 and then divide by 12

Working out your Income

Income will include the following:

• Your normal take-home salary or wages
• Welfare Benefits and Tax Credits

It’s worth checking if you are getting all the benefits you are entitled to especially if you find you don’t have any money left over on your budget or if your income is less than your spending.

If you are unwell or caring for someone who is unwell there’s a range of benefits you might be able to claim. For example:

• Personal Independence Payments if you have a disability,
• Employment and Support Allowance or Universal Credit if you are unwell and unable to work,
• Carers Allowance if you are caring for someone who is disabled.

You might also be able to get money from other people who live with you. For example, if you have grown-up children who still live with you, they could contribute to the household expenses like bills and food.

Working out your spending

This will include:

• Household bills e.g. rent or mortgage, council tax, gas, electric
• Phone and Internet costs
• Travel
• Housekeeping e.g. food, cleaning materials, clothing
• Other spending e.g. hobbies, pocket money, birthdays and Christmas gifts

When you work out your budget it is important that the figures are accurate. Working out the amount for bills can be quite straightforward as you can use your bank statements and previous bills. Things like food might be a bit more difficult to work out, but just try to be realistic.

If you struggle with managing your spending when you are unwell then have a look at our Top Tips Section, which gives some ideas that you may find helpful. 

Work out the difference between Income and Spending

If you have money left over you can use this money to save, or if you have debts you can work out how much you can afford to pay each of your debts.

If the money you have coming in is less than your spending, you can use your budget sheet to help you identify ways to make your budget balance so you have enough money to cover all your spending.

Saving

You can save for things that you know are coming up, like putting money aside for Christmas or birthdays, but you can also save for unexpected events so you have money to fix your car or replace a household item if it breaks.

There are different types of savings account available for different things. You can open a savings account with your bank or you could consider opening an account with a credit union.

The Money Advice Service website has some useful information on choosing a savings account and credit unions.

Dealing with Debts

If you are struggling with debts you can use your budget to work out what you can afford to pay to those you owe money too. Your budget can also work out which is the best option to deal with your debts.

Find out more about options for dealing with debts.