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why is it important to make a budget?
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For the vast majority of people the amount of money available to spend each week, month or year is limited.
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Your income can come from a variety of sources such as:
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Pay for working
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State benefits you are entitled to
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Interest earned from savings
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It is reasonably easy for you to work out how much money you will receive each week from each of these sources. As long as you stay employed, for example, you will have a good idea of how much money you will receive at the end of the week or month.
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You may also get money from other sources:
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Gifts or loans from other people
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Loans from a bank or other lender
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Gambling, such as the Lottery
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These sources of income are less certain – the friend you hope will lend you money may not want to do so, or may suddenly find they do not have enough to lend you any or you may not win on the Lottery! Gambling is not recommended as a way of regularly obtaining money.
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However much money you earn, it is important that you decide how best to use it. This is what making a budget is all about. It helps you to identify how much money you will receive – your income – and how much money you are likely to spend – your expenditure. By working this out you will have a good idea of how much money you will have left at the end of the week/month or how much you will need to find to cover all your expenditure.
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By working out your budget you will be able to answer some of the following questions, or at least start to answer them. You may need to ask for help in order to sort out any problems. |
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How much income do I expect?
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How much expenditure do I expect?
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What money is left over, if any?
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Am I spending too much money to cover my costs? |
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Do I need to cut down on some spending? |
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How can I cut down on my spending? |
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Where can I find additional income? |
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Are there any benefits available to me that I can claim? |
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The activities on the next page will help you to make a budget based on your personal income and expenditure. You may want to ask someone to help you with it. |
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