How to write a budget

Take control of your money and find out what you're spending it on every month. Here is how to draw up a budget to stay on top of your finances.

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Why budget?

Drawing up a budget makes it easier to manage your money and will ensure you are not caught out by any unexpected expenses.

It will help you find out whether you spend more than you earn, and give you an idea of what you can afford to spend.

This should help you find a clear and simple way to spend less money than you make.

Tips for writing up your budget

Before you write your budget, use these tips to make sure you have everything you need:

  • Work out when bills go out: If most of your expenses go out monthly, calculate your income and expenditure as monthly figures

  • Be as accurate as possible: If you have to estimate, it is better to overestimate your figures rather than underestimate them

  • Take your time: To make your budget as accurate as possible you need to set aside time to write it so you can give it your full attention

  • Think about who the budget is for: For example, if it is for you and your partner, make sure you draw it up together and include both of your incomings and outgoings

  • Get all your paperwork: You will need all the documents that show your income and expenses, for example bank and credit card statements, utility bills and receipts

When you have everything you need, use our comprehensive budget spreadsheet to work out exactly how much you earn and what you spend.

Download our comprehensive budget planner spreadsheet - PC version

Download our comprehensive budget planner spreadsheet - Mac version

Step by step budgeting

Follow these steps when you fill out your budget to make sure your results are accurate:

  • Work out exactly what you earn: Use your payslips to enter your salary after tax, and include any second jobs you have. Make sure you include any benefits you receive.

  • Do not duplicate your outgoings: Be careful to only enter your bills once, for example, if you pay for your broadband, TV and home phone together, just enter the total cost.

  • Include one off spending: Even if they are not a monthly cost, you need to include one off purchases like a new car or boiler. Think about how much you spend at Christmas and divide it by 12 to come up with a monthly amount.

What do your results mean?

When you have entered all your incomings and outgoings, you will be given a total that shows how much you are over or under spending each month.

If you have a negative total

This means you spend more than you earn and you are living beyond your means.

Use this ultimate checklist to find out how you can cut your outgoings and get back into the black.

Once you have been through our checklist and worked out how you can curb your spending, try your budget again and see where you stand.

If you have a positive total

This means you earn more than you spend and are in a good financial position.

It is still worth looking to see if you could be saving money, because you may be spending more than you need to.

If you have a positive total, think carefully about what to with the extra money you are not spending. You could:

Help stretch your budget a little further by making the most of your savings.