Financial Friday #GreatBritishBudget Basic Guide to Budgeting

February 14, 2014

I wanted to run a series of budget and money related posts throughout February... and so Financial Friday was born!

Over these next three Fridays I will cover:

How to Budget - The basics
How to Avoid Temptation - Sticking to your Budget
How to Cut Back Without Missing Out - Inexpensive treats

So, this first topic: How to Budget

I am going to show you our personal budget, not with the same figures but with all the same principals. 

We had a tough time a few years ago - we dropped down to one wage and had an extra mouth to feed. With this came a real need to control our spending, budget every penny and cut right back. 

In fact, when our car broke down we didn't have the cash to repair or replace it so we had to make the decision to scrap it and manage without. For two years. For us it was very important not get in to debt, so my husband would cycle to work (4 miles away across the other side of town) and my daughter and I would manage with walking and buses. 

I will go into more detail about sticking to a budget - I have lots and tips and tricks but this week I will just share the basics with you to keep this post a reasonable length. Here is an example of how you may want to structure your budget. Essentially you want a section for money coming in, money coming out (bills and fixed amounts that cannot be changed) and then a calculation of what the difference is - i.e. your spending money for things that can be economised on and spending changed like food, petrol, etc.

Wages  1500.00
Child benefit 80.00
TOTAL IN 1580.00
Mortgage 500.00
Council tax 110.00
Energy 85.00
Internet & TV 37.00
Water 30.00
Vodafone 20.00
Orange 20.00
Life insurance 7.00
TV License 12.00
Spending money 50.00
Spending money 50.00
Car 50.00
Christmas 15.00
Insurance 10.00
TOTAL OUT 996.00
Difference 584.00

The first 9 items in the 'money out' section are bills, we reduced them down as much as possible - phoning the companies and looking on line to check that we are on the lowest price plan or best deal possible (without going into arrears of course) reducing the minutes and text allowance on our mobile phone bills, etc. 

After 'TV license' you will see two lots of 'spending money' - this is what kept us sane and reduced arguments through this period of our lives (and still today!) We paid ourselves our own spending money allowance, when our income was very low then this amount was very small, but it was our own money to spend how we wanted. We could save it up or spend it how we wanted. Christmas and Birthday money was always our own as well, tempting though it was to help out our joint account. I would buy Maddie clothes and treats out of my own personal money as the joint account could not stretch to it at times.

You will also see 'car', 'Christmas' and 'insurance'. These are standing orders that go out into separate savings accounts. We save £X a month towards the cost of Christmas each year, £X towards car and home insurances and then another £X amount towards car running costs so that we would be able to afford MOT and repair the car... when we had one! 

I strongly recommend to anyone, especially those on a low income, to save a small amount each month towards large yearly bills - Christmas, car repairs, insurances, optician bills, dentists bills, etc.

I completely understand that it is tough to find that £10-£50 a month... but it is even harder to find £100 (or more) in one go. Even if you don't save the total amount and you only manage half of the total figure then at least that will go some way towards helping you out when that bill is due - it will at least soften the blow a bit.

That is it for budgeting 101, as I said it is just a simple, basic guide today with more hints and tips on how to stick to your budget next Friday. 

Thanks for reading, let me know your thoughts below. Do you budget? Any tips you can share with us?
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  1. Excellent post Rach and so relevant for these cash strapped times. Some wise advice there x

    1. Thank you very much, that is great to hear xx

  2. Very helpful post Rach - Im putting money away each week doing the 52 week money challenge, week one £1, week 2 £2, week 3 £3 etc - all the way to Christmas, - its week 7 now and we have £28 in the kitty - by Christmas if we stick to it - there will be £1378 - which will be lovely :) x

    1. thank you :-) good luck with your challenge, I heard about that (on a YT video) but panicked about the higher amounts you have to put away for the second half of the year!! haha! it's a great idea though. thanks for reading xx

  3. Great post, Rachel! Very helpful to people when they might need it most. In our hardest financial moments, we had to pick and choose bills - my hubby even took a fortnight off week once as we couldn't afford his transport! Things are much easier now (thankfully), but I would say to anyone who is strapped for cash - stop staying up until 3 am worrying and accept your situation, if you can't pay then cut down (phone around) + cancel non necessities such as your car and sky TV for example. If you can't afford a spending allowance, always allow yourself and your family something to look forward to every week, things like a walk in the park or a trip to the museaum don't have to cost money :-) Most importantly, it does get better - every month you pay your bills, it will eventually improve to the point where you aren't struggling any more. We have freeview TV and decided to get netflix (roughly a fiver a month), so we can watch whatever we want without having to leave the house! Saturday night is now film night and we all really look forward to it! I also agree with saving towards bigger occassions such as Christmas, it's easier to lose £10 a month than part with £100 in one go xx

    1. Thank you!
      Gosh, you must have had a tough time, glad you are in a better place now. Same for us, ours was pretty scary for a while (more in Friday's post) but luckily much easier now.
      I love your tips, all great, thank you! We have Lovefilm so we can get some of the newer films on DVD and then have some of the classics and TV series on instant... I am currently re-watching Grey's Anatomy as I cannot get enough of it!!! I've seen the first 4 series 3 times :-/
      Anyway... I've said too much!! haha!
      Rach xx


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