An important aspect towards becoming debt free is making a budget each month so you can keep on top of your spending.
Knowing what you have and what you spend is important because if you don’t know what you spend each month you could continue getting further into debt.
This post is broken up into sections explaining why you need a budget when in debt, how you can set up a budget and what tools are available to help you budget. Hopefully at the end of this post you will be in a position to set up your own budget and start managing your money more effectively.
Why you need a budget when in Debt
When you are in debt you typically want to get out of it in the least possible amount of time. Budgeting will allow you to review what you spend on things, and maybe look towards reducing those expenses so you have more money to pay off your debt.
The opposite side of this is you may find you are running out of money towards the end of the month and are borrowing to bridge the gap to your next payday. Again having a budget in place will allow you to see ahead of time where you may struggle so you can adjust your expenses accordingly beforehand and hopefully avoid borrowing any more money.
How can you set up a budget?
A budget essentially boils down to two things. How much money you receive and how much money you spend. Take how much you spend from how much you receive and you are either looking good with a positive figure or are struggling with a negative figure.
You could grab a good old fashioned pen and paper and write down your income and expenses and use a calculator to work things out. Alternatively if you are good with a computer you could create a spreadsheet to track your income and expenses. I use the spreadsheet method and create a new sheet each month to track what I am spending during that time.
If you are not sure what you spend, dig out your old bank statements or credit card statements to take a look. Based on that information you can generally get a rough idea of what you spend each month. If that is not possible, from your next pay day start writing down each and every payment you make and then use that information in the following month to start your own budget.
What tools are available to help you budget?
The Internet is a wonderful thing with lots of information and resources available to help you do things. Budgets are no exception and here are some links to external websites that can provide you with the tools you need to get started: –
You might have seen the television adverts for the Money Advice Service or Ma as they refer to it. There is a handy budget planner on that site which can help you plan a budget.
Another tool available comes courtesy of Money Saving Expert. There also a whole article about budgeting above with some excellent advice on how to get started.
If you have found this article because you are looking for help budgeting with your debts then that’s no problem. Visit my page about Help with Debt to find information on how to start solving your debt problems today