Budgeting is about managing your money. Setting a budget will help you work out how money you have available to you, what you need to spend it on and how much you have left to buy things you want. Successful budgeting should allow you to plan to spend and save your money comfortably and within your means, contributing to a healthy and controlled relationship to money.
Preparing a personal budget
The best way to budget is to draw up a budget sheet.
Make a list of how much money you earn or have coming in each month, and another list of what you need to spend it on. This will help you work out how much you can afford to spend each month. You should then a target spend for each of the things in your list. This should be a reasonable figure, too low and you won't be able to stick to it.
Include things like the following:
mobile phone costs (contract or pay as you go)
food and drink
toiletries or cosmetics
any courses, classes, or memberships
magazines or newspapers
books, cds, and dvds
entertainment - cinema, going out with friends, etc
gifts - birthdays, holidays, and other presents that might come up
Each month you should write down how much you actually spend in each area. Some might be more than you'd allowed, and some might be less, but hopefully it will balance out.
Look back over your budget every month and see what areas you are overspending in and what needs adjusting. This is a good opportunity to see if you can afford to save any money too.
Identify a non-essential item or expense, cut-it out for a day, a week or even a month and see how much you could save!
Budgeting can show you where your spending habits and your expenses aren't matching up, and possibly where savings can be made.
Take a look at the Money Advice Service website for some helpful tools to help you manage your money.
Want to make the most of your money? Take part in a free confidential financial health check from the Money Advice Service. Just answer some straightforward questions about you and your money and the health check will set out what you can do in easy steps.
If you want to make sure you have the money management skills that you will need throughout your life, ask your school or college if they are offering the Personal Finance Award.
The Personal Finance Award is a qualification run by the SQA, which will equip you with skills to cope confidently and effectively with basic financial encounters, as well as teach you techniques for successful money management.
Managing bank accounts
Managing money can be really difficult, but it is really important so that you don’t end up spending money you don’t have! With so many different ways to pay, it’s very easy to lose track of the amount of money you have in your bank account! It’s really important to keep an eye on both the money you have and what you are spending.
Some suggestions for managing your account:
Always keep your receipts when you spend money.
Always get a receipt from the cash machine.
Make a note of all cheques that you write.
Keep a record of all the Switch or Delta payments you make.
Watch your standing orders and direct debits.
Always check your bank statement carefully. Mistakes can be very common.
Be completely honest with yourself.
To help plan your spending, write out a weekly, monthly or annual budget plan.