How to create your own budget

Whether you are a single person who needs to make a personal budget or are reviewing a large family budget situation, you need to take the same action. You need to match your outgoings to your income, as far as is possible, so that you don't create any financial problems for yourself. If you are already in financial difficulties, and as you are visiting this website the chances are that you are, there's a reasonable chance that you have not been working to a budget, as well as you could have.

To create your budget, you will need to focus on your income and assets, your liabilities (bills and debts), and all your expenses - large and small.  Then you will review your financial details and amend or reduce costs so they fit more in line with what you are earning.  When you know where you are now financially, you will be able to identify your options for the future and start to plan ahead.

So, to get started:

• Bring together all copies of past bills you've filed away, such as for gas and electricity, together with all current bills, your mortgage details, payslips, credit and store card statements, bank statements, loan agreements - in fact, anything related to what you are in the habit of spending money on, and what you earn and own.
  
  
• You can make up a simple spreadsheet to record all your information or commit everything to paper. You will need some lined sheets of paper and a calculator.  Use a separate sheet of paper for each part of your budget relating to Income, Assets, Liabilities, and Expenses.
  
  
• List all your income and break it down into weekly or monthly amounts. It is the after tax amounts that you need to concentrate on here because you make payments from your net income.
  
  
• Likewise, list all the assets, your liabilities (all your debts and current bills) and your expenses.
  

Down the left hand side of your expenses sheet write all your different items of spending, and on the right hand side draw four columns. Head these columns 'weekly', 'monthly', 'six monthly', and 'annually'.

As you fill in your spending details, put the expense amounts in the relevant column. For example, rent might be payable weekly, mortgage probably monthly, a magazine subscription or Road Tax six monthly, and a subscription to a car emergency service annually.

Now go to each of the sections below for a checklist of what to look out for and record all the information relevant to your situation.

Budgeting - your income

Budgeting - your assets

Budgeting - your liabilities

Budgeting - your expenses