Struggling with your money?…
Do you use a budget?

Having a thought through plan on how you are going to manage your money can bring control and an ability to make choices. There are some great budgeting tools out there but before going there have a read below for some simple steps that can help with working through making your money work.

Create a budget

The first step in creating a budget is knowing what you have coming in.


You need to write down all of the different sources of income you have coming in – include all money from work and all benefits. Also include any maintenance payments you receive for children.

Make sure you know how often each one is paid – weekly, fortnightly, four weekly or monthly. (four weekly is very different from monthly).

Once all written down work out how much the equivalent is for monthly income.

                If paid weekly – (Total x 52)/12 = monthly

                If paid 4 weekly ((Total/4) x 52)/12 = monthly

                If paid 2 weekly ((Total/2) x 52))/12 = monthly      

Add them all together to get your total monthly income.

  1. The next step is to work through the budget sheet and record everything that you are spending.

At this point write down EVERYTHING…don’t under estimate…be honest.

It can be really helpful to have bank statements with you for the last 3-6 months to show how you are really spending.

Make sure you don’t forget to include any of your costs that only come once a year – Christmas, MOT.

Make sure you work out the monthly amount for each one.

Once you have done this, add them all together to get your total monthly expenses.

  1. This step can be scary…take a deep breath and be brave. Take the total expenses away from the total income and see if your budget is balancing.

DON’T PANIC! If it doesn’t balance at this point and its leaving you with spending more than you have coming in, we have some helpful tips below.

Now is the time to go through your budget and work out what changes you can make in order to get your budget to balance. We will start with looking at your income and then looking at your expenses.

  1. Income maximisation

Is there anything you can do to increase what you have coming in?

If your working – can you increase your hours? (check this does make your situation better with a better off in work calculation)  

Have you completed a benefit calculator to check you are getting all of your entitled to benefits – 2 good calculators are Turn2Us Benefit calculator and EntitledTo Benefit Calculator

If you do use a calculator and find there are benefits you may be entitled to but you need help applying then you can contact the team to help (call 0208 359 2442)

  1. Change your expenses

There are different ways of changing your spending.

  1. STOP – there may be some areas where you can decide that you will stop spending that money completely! Gym memberships, TV/Music subscriptions,
  2. REDUCE – there will be areas where you can choose to not stop but to spend less in that area. Can you reduce your food bill? Can you spend less on travel/petrol?
  3. SWITCH – can you switch your suppliers to reduce the cost? Uswitch or moneysupermarket could help you with getting better deals.

Still not able to make it balance?!

Are DEBTs causing problems? – follow this link for more advice and support agencies

Affected by the Benefit cap? – follow this link for more advice and support agencies


Stick to it

There is no point in all of the previous steps you have taken unless you make a decision that you will stick to it and make a plan as to how you won’t spend more than what you have planned for.

More than one bank account –

It’s a good idea to have more than one bank account – it may be helpful to have 3 active accounts.

  1. Direct debit/standing order account – Have one account which simply does all of your direct payments and set up as many direct payments as you can!
  • Rent, Gas, Electricity, Water, Mobile phones, Internet,

This should be the account you set ALL of your income to come into – then set up transfers to your other two accounts.

  1. CASH account – this is the account you spend from.
  • Shopping, leisure, petrol, travel etc.
  1. Savings account – this is where you can save for the irregular costs (annual/biannual/termly/holidays/christmas)  

This seems like a backward step for some, an inconvenience, and definitely not the way most people are trying to get you to move in.

However, think about some of the benefits

                Control – with cash, you simply can’t spend more than what you have?

Value of money – when you spend with cash it makes you think and value what you are spending.

You can’t move to cash for everything, but you can for things like food shopping or leisure money.

Why not try it? Work out what you can use cash for and then withdraw the amount you have budgeted and give it a go.

Living within your means is not a popular idea, but I think is one of the most important decisions you can make. The average household debt in the UK is £60,213 and 318 people per day were declared bankrupt or insolvent from October to December 2019, that is the same as one person every 4 minutes and 32 seconds.

Making the decision to not live beyond your means will mean you don’t get out of control!

Some people when they are struggling to balance their budget will not create any savings, seeing it as a luxury. I want to convince you to reconsider, there is a few good reasons…

Short term – If you don’t create any savings at all whenever less regular costs come up (MOT/Christmas) sticking to your budget will become impossible! You need to create some savings each month which go towards the annual costs which come up.

Long Term – this builds resilience into your budgeting, allowing you to have more freedom in the future. It allows you to make choices to have holidays without needing debt, replace the car, replace the sofa. Buy a house?

Having aims in your savings can bring about more motivation for it and help you to make sacrifices in your budget elsewhere and change spending habits to stop you spending. For instance if you want to go on holiday in a years time and you know you will need to pay for it on a specific date then you can aim to save a specific amount each month, and knowing you will get the holiday will help to make the sacrifices in other areas.