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Budgeting and money management ideas with ASDA

Budgeting

Budgeting should be the cornerstone of your personal money management plans.

But how many of us have actually taken time to work out what we spend, and consider how that compares to what we earn?

Knowing this, and controlling your finances, allows you to plan ahead and sleep soundly at night without the fear of spiralling debt.

And thanks to a host of budget planning tools available free on the internet, money management has never been easier.

What is a budget; what does it involve?

Put most simply, a budget, usually calculated over a month, has two broad columns: income and expenditure.

If the amount you earn, through employment or benefits, is outweighed by your spending then you’re heading for trouble.

Taking time to carefully work out what you’re spending your cash on will allow you to identify where savings can be made.

What do I need to make a start?

You can create a budget planner simply with a pen and paper. But you may wish to use one of the ready-made planners that exist in cyberspace – or at least get ideas about how to proceed from examining one, right through to the actual budgeting itself.

The Money made clear website, launched by the Financial Services Authority, features such a budgeting tool. A simple planner is available from the British Bankers’ Association that provides helpful and unbiased ideas on how to manage your monthly budget.

Next, you’ll need to gather together your financial paperwork.

To work out what you spend, you’ll need recent bank statements, utility bills, council tax bills, mortgage statements, phone, TV and internet bills and insurance invoices to name a few.

Estimate what you spend on everyday items, such as bus fares, petrol, newspapers, clothing and food.

Finally, you’ll need to factor in one-off costs, such as Christmas spending, holidays, car and household repairs and birthday presents.

What are the common budgeting pitfalls?

It can be easy to underestimate costs, miss them off, or double count them – so take your time.

For example, if you’ve got school-age children, have you factored in extra costs you may face during the school summer holiday such as bills for childcare? Or perhaps you’re not accounting for one-off car costs which any motorist will face for things such as new tyres or repairs.

Another tip is to overestimate if you can’t be accurate. This way, if you’re wrong, you’ll probably have money left over.

And regarding double counting, here’s an example. Your budget planner sheet may include a column for credit card debt. In here you need to include the cost of paying off existing debt. Don’t include your monthly spending on a card, such as supermarket shopping, or you run the risk of including this spending again in your “food spending” column.

I’ve done my budget – what next?

Hopefully, the results will be revealing. If you’ve got money left over at the end of each month, you can draw up plans to invest it, or spend it.

But if your spending outweighs your income, you’ll need to act. If you aren’t in a position to increase your earnings, you’ll be eating into any savings you have, or be sinking deeper into debt.

Either way, effective budgeting lays bare how much you are actually spending. So regardless of whether you’re in the black or the red you can seek to get better value in all areas of your financial life.