Managing Your Personal Budget – 12 Tips

The first step in managing your personal budget is to take a observe of all your outgoings. You can do this by checking bank statements for direct debits, standing orders and other payments out. These can then be additional together to find the total monthly outgoings. Quarterly, weekly and annual outgoings will need to be converted into monthly amounts. Don’t forget expenditure that doesn’t appear on your bank statement, such as food bills. If you have a car, the cost of running the car will include insurance, tax, service, mot, petrol and repairs. A spreadsheet is useful for totalling monthly outgoings, but it can also be done manually.

Next step is to total your income. This will include salary, expenses, allowances, bonuses, benefits, pensions, interest etc.

Once you have done this, you can compare income with outgoings. If outgoings are too high in relation to income then you may need to look at ways of reducing outgoings or increasing income. Here are some suggestions for managing your budget:

1) You could try changing your mortgage kind or shop around for better deals with other lenders. You will firstly need to check if you are tied in to your current mortgage, as some mortgage providers charge penalties if you move mortgages.

2) You can also shop around for insurance, utility bills, holidays etc. by one of the many price comparison websites on the internet.

3) When food shopping, you could try buying shops’ own brands, or other cheaper alternatives. Often pre-packed food works out more expensive than preparing your own.

4) To cut down on transport costs, think about what is the cheapest, possible way for you to get to work. This could be by public transport, cycling or walking. If you are a two car family, you may be able to manage with one car.

5) You could spread the cost of by paying monthly where possible.

6) You could maybe cut down your expenditure on luxuries such as meals out or designer use.

7) If you are off work by illness, check if you have mortgage protection insurance.

8) If you are in receipt of benefits, make sure that you are receiving your complete entitlements. Likewise, if you are working, check that your tax code is correct and that you are receiving any tax allowances due.

9) You could get other adults in the house to contribute financially if they receive an income or benefits.

10) Change direct debit and standing order dates so that they hit your account after pay day.

11) If outgoings are nevertheless too high, you could look at ways of increasing your income such as: a second job, taking in a lodger, negotiating a pay rise or changing to a better paid job.

12) In extreme circumstances, you may find that you need to downsize your home.

If you are nevertheless having problems after following these suggestions, it is a good idea to contact the Citizen’s Advice Bureau or the National Debtline (for UK residents); details can be found on the internet. They offer free impartial advice for managing your personal budget.

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