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Basic budgeting

In order to keep track of your finances, it is a good idea to make a budget for yourself, and learn how to stick to it. A budget is a good way of keeping an eye on where your money is going, and can also give you a clear picture of how your finances look, and help you to make any financial decisions responsibly.

Income

The first thing you need to do is work out where you get your money from on a regular basis. You may receive money from your parents in the form of pocket money or wages for doing the household chores. You may have wages coming in from a paper-round, part time or full time job. You may receive benefits from the government in the form of job seekers allowance. Whatever your sources of income, write them down in a table like the one given below


ItemAmount (weekly/monthly) delete where applicable.
Pocket money£10.00
Wages 
Benefits 
Other 
Total Income  


Once you have all the forms of income you have, and the amounts of each one written in the right hand column, add them all up and write the totals in on the last line. This is your total income.

Outgoings

After you have worked out your total income, you now need to work out your total outgoings. Your outgoings are everything that you like to spend your money on.
You need to make sure you write down everything that you spend your money on.
It may be that the younger you are, the less responsibilities you may have with your finances, and your table may look like the one below. You may find that the older you are the more items like rent or mortgage payments you will need to include.

Outgoings Amount (weekly/monthly) delete where applicable.
Going out with friends  
Food and drinks  
Make up  
CD’s 
DVD/Videos  
Cinema tickets  
Computer Games  
Other  
Total Outgoings  


Once you have completed this table, you should have a figure for your total income, and your total outgoings. Now you need to subtract the total outgoings, from your total income. This will then tell you how much money, if any, you have left to get you through the rest of the month.

Your results

If your answer comes to more than 0, you have this amount still to spend before you get paid again. You may find it beneficial to save this money for a rainy day, or to start an emergency cash fund. You never know what the future may bring, and it’s always a good idea to have some savings to fall back on if times get hard.

If your answer comes to bang on 0, then you are managing to spend your money, and have no more room to comfortably keep spending. It may be beneficial to see if there are any areas in your spending that you could cut back on, and start saving up a pot of cash for a rainy day, or an emergency fund. You never know what the future may bring, and it’s always a good idea to have some savings to fall back on if times get hard.

If your answer comes to less than 0, then you are spending more than you can afford. You need to start thinking if there are any areas in your spending that you can cut back on. If you don’t do this, you may soon find yourself up to the eyeballs in debt, if you’re not already. Act now, before you start getting into real difficulty.





Disclaimer,   Target Audience,   Jurisdiction    Last updated & checked: 30/03/2006