Many people at some stage of their life consider making a budget to help them calculate their income and expenditure.
However, it is important to be realistic and comprehensive in order to gain any usable information from the process.
Leaving out items such as travel and basic living costs such as food, clothes and nights out can all make for a budget that is unrealistic and misrepresentative.
When making a budget, start by listing your income.
Look at your basic pay, benefits and investments, then go on to list your outgoings, including bills, credit agreements, and all predictable and repeatable purchases. Be meticulous. Below is a basic list to consider.
Your income is the money that you have, after tax. This includes money from:
- Net Pay (after tax)
- Benefits (tax credits, bursaries, grants etc)
- Pension incomes (state, private and work pensions)
- Savings/Investment Income
- Self Employment
- Other financial support (Partner/ Children/ Parents)
- Child Maintenance
Your outgoings are everything that you spend in a given timeframe.
Most people budget monthly, or even weekly if their budget is tight. Your outgoings will most likely be split over the following.
Most people will have the outgoings listed below. However, there are a lucky few who may live with their parents or have paid off their mortgage who do not need to pay a mortgage or rental fee.
This is quite often a large chunk of your income, so reducing your mortgage repayments or rent is a good way of saving money, if at all possible.
- Council Tax & Ground Rent
- Utility Bills (Electricity, Gas)
- Water Rates
- Telephone, Broadband, Sky
- House Insurance
We all (well, most of us) have a bank account. If you have a bank account, you may be aware of credit cards, loans and bank charges that can be accrued. These include:
- Credit Cards
- Store Cards
- Hire Purchase Agreements
- Student Loan
- Bank Interest and Charges
- Pension Contributions
Travel and Transport
Transport costs are quite often accumulated for business or social purposes. There are ways of reducing your outgoings on travel, especially if you have a car, by more efficient driving.
- Car Credit Agreements (Hire Purchase/ Credit Agreements)
- Tax and Insurance
- MOT (and make a realistic allowance for expected repairs)
- Fuel (look at MPG and calculate based on average usage per month)
- Breakdown Cover
- Parking costs
- Other Travel, Trains, Taxis, Buses, Metro, Air Travel
Although the NHS allows heavily subsidised health care, you are likely to have costs for the following:
- Dentistry (Upkeep, expected work, check up costs)
- Eyecare (Glasses/ Contact Lenses, Opticians, Eye Tests)
General Living Costs
On top of all your costs, you still have to enjoy what you have! In order to do that, you may also spend on:
- Mobile Telephone/ Mobile Internet
- Nights out/ day trips
- Gym/ Exercise related costs and equipment
- Birthdays/ Christmas Presents
- Hobbies/ Interests
- Lottery/ Gambling
- Annual Holiday
- Travel Insurance
Having children will also add to your monthly outgoings. This may include:
- Education costs (additional travel, school dinners)
- School related costs – Stationary/ Specialised Equipment/ Uniform
- Maintenance contributions
- Activities and Clubs
- Pocket Money
Pets, although costing less than having children, will require you to spend on food and vet fees periodically.
- Vets Fees