What is a Budget

A budget is a spending plan based on income and expenses. In other words, it’s an estimate of how much money you’ll make and spend over a certain period of time, such as a week, a fortnight, a month, or even a year.

Budgeting is taking control of your money

The motivation behind budgeting is different for everyone. It could be:

• Understanding your relationship with money

• Saving for the future

• Getting – or staying – out of debt

• Relieve stress

Budgeting can be done in a number of ways, including:

• Budgeting apps

• Percentages, such as the 50/30/20 method

• Envelope or Jar systems

• Zero based budgeting

Budgeting tools

Online Budget tool

A useful budgeting tool for this is the Money Helper online budgeting tool. It includes all aspects of a monthly budget and you can be as detailed as you like. You can also save your budget online. You can access that resource here: Money Helper Budget Tool

Budgeting Apps

There also a number of free budgeting apps available on IOS and Android. The Balance recommend the following 8 apps for budgeting:

• Mint: All-round good offer

• PocketGuard: targets those who overspend

• You Need a Budget: targets those who are detail oriented

• Wally: basic and easy to use

• Mvelopes: mimics cash envelopes

• Goodbudget: targets couples or partners

• Simple: targets those looking to link directly to their bank account

Printable Budget tool

If you prefer a printable version - check out StepChange

Physical Budgeting - with real money! - The Jam Jar approach

A popular method is to use the ‘Jars’ approach. This strategy has you physically place money in different pots to establish where your money will go. There are online versions of this with some bank accounts - or you could just use several accounts to achieve the same outcome.

Whether physical or online, this method gives you a clear outline of what is left ‘after bills’ and ensures that you have set enough aside to cover your monthly expenses.

Be aware that some ‘Jam Jar accounts’ can come with a monthly cost, just as some budgeting apps do. Look for those held with credit unions to escape the extra fees. More from Money Helper

Understanding your relationship with money

Why am I budgeting?

A budget helps you feel financially stable, by tracking what comes in and goes out you can take back control of your money.

Reasons you might need to budget:

-          Wanting to feel more independent

-          Wanting to feel more in control

-          Wanting to be on the path to your financial goals

-          Saving for …..(house, retirement, holiday, emergencies etc)

-          Preventing/ managing debt

-          Making you feel more organised

-          Relieving stress

-          Preparing for potential emergencies

Thinking about why YOU are budgeting is a good start to getting into a routine.

What budgeting method is right for me?

Trying to follow someone else’s method is not going to work for everyone. We are all different. Our lives and values are different, not to mention our incomes.

Here are some ideas (as well as the tools above) to try when thinking about your own budget.

Balanced money formula - 50% - 20% - 30%

The idea with this method is you put 50% of your total income on needs, 20% on saving and 30% on wants. Needs would be things like bills and food, things you cant live without. Saving would be future goals or emergency funds. Wants are everything else.

Cash only buying

Trickier to do in a contactless payment world. Basically, just like with the jam jar method in the budgeting tools section you allocate money to separate categories and put that money in physical jars or envelopes to match those categories.

There are digital versions of this, some attached to bank accounts - just watch out for hidden charges!

Zero - based budget

A time consuming method where you record every transaction as it happens.

The 60% solution

60% of your finances are allocated to ‘committed expenses’ - things link house, food, bills(including all your extras like tv subscriptions). the remaining 40% goes into four categories: Retirement, Long term savings (emergencies etc), Short term savings (holidays etc), Fun money (wants)

No budget - budget

Really simple - pay attention to your bank balance. By having bills etc automated, you can budget by monitoring your balance and allocating the remaining allowance between savings and fun.