Budgeting week: Why you really need a budget

It's essential for accurately managing your money

Budgeting week: Why you really need to keep an eye on your finances throughout the year

All this week we'll be helping you start and stick to a budget. In this first part, we'll share why you really need to build a budget.

See also: How does your household food spend compare?

See also: The expenses you're forgetting to add to your budget

You might not have got around to producing a household budget, but whatever the reason you've put it off, the benefits mean it should be your priority – especially if you're struggling to manage your money.

In this video, our money expert Andy Webb explains why a budget isn't dull:

A budget can give you freedom

A budget is the easiest way for you to begin to regain or keep control of your finances – and that will give you a huge amount of freedom.

Need money for a holiday? The budget will show you how much you can save.

Applying for a mortgage? A budget will help you get your finances in shape.

Trying to pay off debts? Budgeting will help you identify where you can cut back.

And of course, the list goes on.

When you look at what a budget can give you, and the opportunities that can come as a result of knowing more about your money, it's difficult to say they're boring.

Most importantly with a budget you will know the true state of your finances, better preparing you for the good or bad that comes your way.

Budgets aren't scary

You might hate the idea of maths, but budgets can be really easy.

At its most simple, a budget is just two lists. One list is of the money you spend, the other of the money you earn. Usually this is monthly, but you might want to do it weekly. Plus, since some expenses are once a year, you might consider an annual budget too.

You can use the spending list it in two ways. One to see how much you spend on each individual expense, and the other to see how much you spend over all.

The income list will also give you a total, and when that's compared to the overall spending total you'll immediately see if you're spending more than you can afford, or if you've got some space to make some changes.

Find out how to budget – and the way our Budget Planner tool will make it easier – throughout the week. Tomorrow, we'll look at what you need to start budgeting.

This article is provided by the Money Advice Service.



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