Drawing up your budget will take a little time and effort, so it’s a good idea to set aside some time when you know you’ll not have too many distractions and will be able to concentrate. It may also be best to gather together all the things you’ll need before you start (for instance receipts, bills, bank statements, calculator etc) so you don’t have to keep jumping up and down to go and find things.

If you don’t usually keep track of your spending it might be handy to keep a diary of all your outgoings for a month before you try and draw up your budget rather than just guess at amounts – you might be amazed at the difference between what you think you spend and what you actually do! There are many ways to go about this – from downloading gadgets for your mobile which do all the hard work for you to simply jotting down in a notebook or diary everything you buy over the month.

You need to be completely honest with yourself about how much you're spending on different things – if you’re not, your budget won’t reflect your true financial position and you may find yourself struggling further down the line. In order to work out your budget you can use an online calculator such as http://budgetbuilder.creditaction.org.uk/, use our Personalised Budget Sheet if you have signed up in the Member's Area of the site or just sit down with a pencil and paper and run through the following steps yourself:

1. Firstly, decide whether it is easier for you to do your calculations based on weekly or monthly costs. It doesn’t matter which you choose, but you must stick to the same throughout your budget. You may find that some of your figures are in weekly amounts and others monthly (for instance you might have income that you receive every week or two weeks but then pay your rent every month or 4 weeks. You will need to get all your figures to be for the same timescale, so if you do have a mixture of timescales at the minute you can use our conversion guide below to get all your figures to fit.
   
   

   Weekly to monthly – Times your weekly figure by 52. Then take your answer and divide it by 12
   
   Monthly to weekly – Times your monthly figure by 12. Then divide the answer by 52.

   Weekly to 4 weekly – Times your figure by 4.

   4 weekly to weekly – Divide your figure by 4.

   Monthly to 4 weekly – Times your monthly figure by 12. Divide the answer by 52, then times the result by 4.

   4 weekly to monthly – Divide the figure by 4. Times the answer by 52. Then take your result and divide it by 4.

   Half termly lesson fees need to be multiplied by 6 to get a yearly figure.

   Weekly activities that only happen during term time need to by multiplied by 39 (usual number of weeks in an academic year) to get an annual figure.
   
    

2. Now you need to list all your income, including wages, benefits, pensions, interest on savings or investments and any other money you may have coming in, for instance from grown up children who may contribute towards the running of the house. Add these up to find the total you have coming in each week/month. 
    
3. Next, list all your outgoings – your rent or mortgage payments, household bills (gas, electricity and water), TV licence, phone bills, travel costs (include tax, insurance, breakdown cover, MOT, repairs and petrol if you have a car), food and drink (including school meals and any food you may buy at work), housekeeping costs, payments you make on any debts, credit cards or catalogues, payments on hire purchase agreements, child maintenance payments, anything you spend on leisure activities for yourself or your children, cigarettes and alcohol and any other expenses you may have. Add these up to find the total you spend each week/month. 
   
   If you find at the point you are struggling or you’re not sure you’ve remembered anything, it may be worth trying to keep a diary of your spending for a few weeks to help you get more accurate figures for your budget. 
    
4. Finally, take the total amount you spend each week or month away from the total amount you have coming in. The figure you get will be how much money you have left over each month.

If this is a minus number, that means you are spending more than you earn – look at our Increase Your Income page to see what you can do about this, and try our Dealing with Debt section which may provide some guidance. If you are in serious debt seek help immediately – go to our Useful Organisations page to see who to contact.

If the number you have left is positive then it’s good news – you have some ‘spare’ money left over! Before heading out on a shopping spree to celebrate though, it’s worth remembering that you may also need to plan for unexpected costs that are not taken into account by your budget calculation. For example, how would you cope if you lost your job, became ill or had to shell out for a major expense, for instance if your boiler broke down? It might be worth thinking about putting some money aside for a rainy day just in case the worst should happen. Find out more about saving in our Financial Services section.