Creating a budget is the first step towards being in control of your finances. Budgeting helps you see where your money is going so it is easier to make savings and make sure that you account for all your needs. We recommend that you make all the figures in your budget calendar monthly because most of your bills and debts require a calendar monthly payment.

How to create a budget

First you need to work out your total income. Add together all the income you get each month. Make sure you include everything - for example, wages, benefits and pensions. Don’t forget that some of your income might be paid monthly and some four-weekly.

Next, make a list of everything you spend each month. Make sure you include amounts for spending even if you only pay for something once a year, such as Christmas, car repairs and vets bills. You need to divide the yearly bill into 12 instalments and include the monthly figure in your budget so that you can set aside the money until your bill is due. If you are not sure what you are spending your money on, try writing down everything you buy over a month. This will give you a clearer idea of your regular spending.

Finally deduct the total amount you spend each month from your monthly income. If you have money left over after you have paid for everything you have a budget surplus. If you spend more money each month than you receive each month you have a budget deficit.

As a debt charity, all our debt advice and help is free of charge. If you would like help making a budget, advice on how to manage your money, or confidential debt advice, use our debt counselling service. Alternatively, you can contact our free Helpline on 0800 138 1111.