Budgeting needn't be a dirty word.

"Budgeting is telling your money where to go -
rather than asking politely where it went."

Why budget at all?
When are monthly payments due?
Occasional big expenses
Making a spending plan
Fixed expenses
Controllable expenses

Why budget at all?

A budget will help you:

1. Answer the question, "Can we afford it?"

2. Make a plan - set aside money to meet your regular living expenses.

3. Become aware of the things you want for the future and start saving money to get them

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When are monthly payments due?

To remember bills that are due on a certain date during the month, it helps to write them on a calendar. Write in the due dates and amount to be paid for these monthly bills:

1. Debt payments due this month such as loans, credit card payments, car insurance, etc.

2. Monthly fixed expenses like rent, electricity, heat, etc.
Get in the habit of looking every week at the next week on the calendar. See what bills are due. If you mail in payments, you will need to send the money at least 5 days ahead to get there on time and avoid late charges or extra interest. Plan ahead to have the money by the time you need it for the bill.

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Occasional big expenses

Some big expenses come up only once or twice a year. Because they don't come up every month, it's easy to forget about them and then not have any money saved up to pay them when they're due. By keeping a list of what is due each month of the year, you can look ahead each month and see if you have a big occasional expense coming up that you need to save up for.


Most of these occasional expenses are fixed amounts that you have to pay, like tuition, books, car insurance premiums, or car licenses. A few are controllable, where you can decide how much you will spend, like clothes, Christmas, or other holiday gifts.

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Making a spending plan

Your spending plan is your decision about how you will use the income you have to buy the things you need and to pay your bills. You can plan ahead for the month on paper, and know you have enough money to pay the expenses you have to pay, and how much you have left for spending where you have some choice or control.

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Fixed expenses

You have to plan first for your fixed expenses because these are regular monthly bills that have to be paid.
For all the fixed expenses that you have to pay, write in the planned amount and the due date. Look at your calendar to see when these payments are due, including any monthly payments on debts. Also check your occasional expense list; are any of those expenses due this month? If there are, write them on your spending plan under occasional fixed expenses. Also, write in the name of the expense (such as taxes, car insurance, etc.).

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Controllable expenses

Controllable expenses include items such as groceries, eating out, gas, household goods, clothes, personal items, recreation, gifts, and contributions.
These expenses are called "Controllable" because you can, to some extent, control how much money you spend for them. You will buy food, but you have some choice over what you buy and how much you pay for it. This is true also for clothing, household operations, and all the other kinds of expenses.

Add up the total of all your estimated fixed expenses. Subtract that from your total monthly income. The pounds left over are what you have to divide up among all your controllable expenses.

Total Income £__________ (-)
[minus]
Total Fixed Expenses £__________ =
[amount left for]
Controllable Expenses £__________

Now add up all the controllable expenses. Is the total less than the amount left after subtracting fixed expenses from your monthly income? Great! You will have a little extra to pay on a bill, or save for something else you need! Is the total more than the amount left for controllable expenses? Then you will have to go back and cut the amount you will spend for some categories until you get the total down to the amount of money you have. When you get the planned expenses adjusted so you are not planning to spend more money than you have, you have taken a big step in deciding how to spend your money.


The next big step is keeping track of how you spend your money this month so you can know how your plan is working...


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