Family Friendly Finance: How to budget

Do you worry about money? Ignore it and hope? Or do you feel in control of your finances?

It worries me just how many people don’t know how much money they have, or find themselves struggling every month. If you are on maternity leave or minimum wage, or are trying to look after a growing family, finances are likely to be tight. But there are some things you can do to help yourself stay in control and stop feeling finance fear every time you wonder if you can afford something.

In this series of articles I share some of my own tips and combine them with resources that I trust and find useful. NB: I’m not a financial adviser, and I won’t be advising you on financial investments. What I will be doing is helping you, step by step, to take control of your money, make the most of what you have, and build a better financial future for you and your family.

How to budget

This week we are starting with budgeting. It sounds scarier than it is – and doesn’t have to involve spreadsheets – but can you if like them.

There are three initial parts to budgeting:

  1. Knowing how much money you have coming in.
  2. Noting down all the money that goes out.
  3. Making sure that the money that goes out is usually a little less than the money that comes in.

Easy to say, harder to do, read on for some different ways to help you get on top of this key step in feeling calm and confident about your finances.

First, make a couple of lists.

List 1 – what I have coming in each month.

This includes earnings, child benefit, tax credits, maintenance, pensions. Look at your bank statement if you are not sure. Write it down – on paper, on your phone, on a spreadsheet, whatever you prefer, and get a total.

List 2 – what I have going out each month.

Start with bills – food, rent or mortgage, gas, water, electricity, phone and wifi. Look at your bank account and see what you have paid for on your card in the past few months. Because I do like spreadsheets (I know…), I download my statements and sort so I can see payments that come up every month AND, vitally, those sneaky payments that pop up quarterly or annually.

Don’t stop there – because some things you might pay for in different ways. Do you have some money coming in and out via Paypal? That counts too, so add it to the right list.

And what about cash? Do you get paid in cash? Do you take cash out and not know what you spend it on? It might be time to open your bag or purse and pull out those receipts that have been lurking and add them to your lists.

Remember to add in expenses like Christmas, birthdays and holidays. You might need to up your food bill for times when the kids are off school. And remember that heating will cost more in the winter.

Add everything up and you will have a fair idea of what you spend each month.

Working on your lists might be a bigger task than you think – and some of the budgeting tools I link to below can help you with more ideas as can this article from the Balance. But don’t get overwhelmed. Making a start is great. Right now, your list may be good enough. Keep on adding things as you pay out in days to come.

Making it work for you

So here you are. Two lists in front of you. You might feel better already, calm and in control because now you know the facts. Or you may be crying as you read this because your outgoings are bigger than your income and you don’t know how to cover the gap.

That’s OK. For now.

You have taken the first step in taking back control of your money.

You know the true situation.

If you have too much month at the end of your money – something that is true for many people now – don’t panic. Citizens Advice have information about dealing with debt, and in the next article I’ll be looking at how to make your money stretch further.

Budgeting ahead

What we have looked at so far involves looking back. Now you need to plan ahead as to how you will spend your money.

You have an approximate idea of how much you spend – and you can divide that into categories life food, utilities and phone, rent/mortgage, other essentials, plus ‘nice to have’ items. Write down your figure for each category, and note down every time you spend something. If you are coming to the end of your budget for that category you might need to stop spending if it is an optional item, or transfer some of your budget from the ‘nice to have’ items. You could also look at ways to add to your income – we have lots of flexible work ideas on this site, and I’ll be writing an article on side hustles and income-boosters in coming weeks. The idea is that you work towards the goal of having a little less going out each week or month than you have coming in, giving you the chance to pay back debts and start to save.

Take one day at a time, keep adding to your budget for each month, and you will soon have a good knowledge of what you can spend and whether you still have a deficit. And if there is one thing to take away from this article, it is that you are in charge of your finances and can decide what to do next.

More ideas and resources

There are lots of online money apps, your bank may have a budgeting part of their app, but I think that apps sometimes make it harder to view your money as real. So, if you struggle with abstract numbers, pen and paper may work best for you.

If you want an online budgeting app to help you, Which? magazine reviews the best ones here.

I will be coming back to the Money Savings Expert site in weeks to come as it is a great source of no-nonsense plain English money advice – and have a range of resources. If you want a spreadsheet or printable budget planner, follow this link.

And Which? magazine offers trusted money advice online – they have some great tips for creating a budget here.

Antonia Chitty is the author of Making Money Online. She is a mum to three and runs Family Friendly Working as well as juggling a range of different income streams.

Photo by RODNAE Productions from Pexels

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