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HomeBudgeting & living costs

Budgeting and living costs

If you’re finding it hard to keep up with payments to your debts the first step is to create a budget.

A budget is a list of the money you have coming in and all the money you need to spend on your living costs. This helps you to see where your money is going and how much you’ve got each month to pay towards your debts.

Even if you’re not struggling with debt, making a budget and sticking to it is a good idea.

Maximising your income

Below are some ideas that may help you increase your income and reduce your spending:

  • Social Welfare - make sure that you're claiming all the Social Welfare you're entitled to. If you're unsure what you're entitled to, please refer to the Citizens Information website
  • Increase your hours - if you're working, see if you can increase your hours or work overtime if available
  • Second job - consider taking on a second job until your situation improves
  • Get a lodger - if you have a spare room, consider letting this out. There are tax relief incentives you may be eligible for. Information about this can be found on the Citizens Information website
  • Keep a spending diary - by writing down your day-to-day spending, you'll be able to keep track of your costs
  • Reduce non-essential spending - lookat your budget and see if there are any non-essential costs you could reduce, such as tobacco or social costs
  • Planning your meals - plan your meals, make a shopping list, and stick to this. This will help you reduce the amount of waste you have and reduce your overall shopping bill
  • Switching suppliers - shop around for the best deals and tariffs for household bills, such as your phone contracts, utility providers and insurance policies

Help with your budget

Putting together a budget can seem daunting, especially if you’re not used to keeping track of your money.

When you put together a budget, we recommend using a format called the Standard Financial Statement (SFS), which is recognised by all your lenders. If you’re struggling to pay your debts, putting together a budget is the first step in getting your finances back on track.

How to create a budget yourself

If you want to put together your own budget, you’ll need a pen and paper and a calculator. It’s also a good idea to have a recent bank statement, bills, wage slips and so on available, so you can note down the amounts from them.

Step 1 – your income

Make a list of all the money you have coming in. Make sure you include all your wages, social welfare benefits and any other income.

You’ll need to decide whether your budget will be weekly or monthly. It’s best to make a budget that matches when you get paid, so if your main income is monthly, make it a monthly budget.

If you make a monthly budget, you’ll need to turn any weekly amounts into monthly amounts. To do this you need to multiply the weekly figure by 52 and then divide this by 12. This will give you a calendar-monthly figure.

Step 2 – your living costs

Once you’ve worked out your income, you need to think about how much you spend. Again you may need to change weekly amounts to monthly amounts, or vice versa.

You need to note down everything you spend, starting with the regular costs such as:

  • Mortgage or rent
  • Household bills such as electric, heating, water and TV Licence
  • Insurances
  • Travel costs
  • Food
  • Debts such as loans, catalogues and credit cards

If you’re not sure how much you pay for these, look at recent bills or your bank statement to help you work out an average weekly or monthly amount.

Next, try to think of all the occasional costs you spend. This might include clothing, haircuts, car repairs or birthday presents. You might not pay out a regular amount for these, so try to think how much you spend in a year and divide it into a weekly or monthly average.

Make sure you write down everything you spend, even the small things.

Once you’ve made this list of expenses and you’re sure you’ve covered everything, try to stick to these amounts. Don’t spend more than this unless you really have to.

Step 3 – what’s left over?

Now you should have a list of your income and a list of your expenses. Add them up so you have two totals.

Then take away your expenses from your income and see what’s left.

If there's money left over we call this a budget surplus. As long as you stick to your budget, you’ll have money available every week or month which you can save.

But if your income is less than your living costs, that’s a warning sign that you may be heading for money problems. This means you’re spending more than you have coming in and you may be getting further in debt each month. This is known as a budget deficit.

Budgeting next steps

First of all, check your budget again to make sure you’ve done your sums correctly and you didn’t miss anything.

Next, see if there are any changes you can make to save some money. If you can cut down some of your living costs, you may be able match your income and spending so things don’t get worse.

Finally, if you can’t work out how to balance your budget, you may need to take more drastic steps such as reducing the amounts you’re paying to your debts. This is where we can help.

If you need debt advice, call the MABS helpline now on 0761 07 2000. They’re open Monday to Friday from 9am to 8pm.

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