Budgeting
Budgeting has two important functions: it gives you a picture of your finances and it is a tool for planning ahead.
Getting Started
To budget accurately, you'll need information on the money you have coming in (known as "income") and everything you spend it on (known as "expenditure").
Please Note
You can find information about most of your income and expenditure on your bank statement. It's also worth noting how much you owe on any overdrafts and any savings or investments you have.
Budgeting Tools
Income and expenditure calculators let you know where you stand and give you useful tips based on your results.
Use online budgeting tools
Our recommended online budgeting tools can help you organise the information you need.
These tools have multiple questions which you work through and can take some time to complete.
Budgeting tools use monthly payments as the default setting. If the amount you spend or receive is for a different time period, click on the box and choose the option which suits your situation, for example, weekly, fortnightly or annually. This allows the planner to convert the different time periods into a monthly budget.
You can use National Debtline's self help guide to budgeting if you prefer not to use the online tool. You can also use their web chat service for guidance and help.
Citizens Advice Scotland's Budgeting tool(opens in new window)Money Helper's Budget Planner
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What to do with your Budget Planner Results?
There are three basic results that your budget planner can give you:
- Your income covers your expenditure and you have a comfortable amount left over. You should follow the tips to build up your savings or plan ahead. You might want to use a budgeting tracker or money management app as shown below - These are free and can be downloaded to an iOS or Android phone.
- Your income covers your expenditure, but you have either no money or only a small amount left over. You should follow the tips such as building a pot of money for emergencies or making sure you have good, affordable life insurance. Budget tracker or money management apps as shown below are useful in helping you plan your finances.
- Your income doesn’t cover your expenditure. If the shortfall is very small, you should follow the tips as they might be enough to cover the difference between your income and expenditure. This might give you room to build savings. You can also visit our sections on immediate and essential money problems.
Please Note
If the shortfall is more than 15% of your total income, you should get help immediately. You can get advice from your local Citizens Advice Bureau.
Sign up to a Switching App
You might be able to save money on your bills by switching to a better deal. Using Open Banking, ApTap is a free and easy to use tool to help you stay on top of all of your bills and subscriptions across all of your bank accounts.
ApTap will automatically find and organise all of your bills to find the best deals on the market based on your spending and service usage. It can help you take take control and simply switch broadband or energy within minutes.
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Get a Money Management App
Various apps offer different tools and ways to track your spending and manage your budget. You can use Which's guide to the best money management apps to help you save money.
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Please Note
New apps enter the market all the time, therefore you should always use trusted sites such as Money Saving Expert or Which? to help you find the best available.
Getting to Grips with your Credit Score
Budgeting can be useful when you're considering applying for a credit card, loan or other forms of credit. When you apply, your lender should check your personal situation to help them decide whether to lend money to you.
This can include checking your budget to see if you have enough income to make repayments. Most lenders will also review your credit score or rating.
Each fact about your situation is given points. When added together, these points will give you a score. The higher your score, the more credit-worthy you are and the easier it is to borrow money. Low scores can make it harder to borrow money.
Get a Credit Report
You can get your credit report from a credit reference agencies. These are authorised companies who collect and store information on your borrowing and financial history.
It's important to check your credit score and get a copy of your credit report. This can show how much money you've already borrowed.
It's a good idea to check your credit report has the right details about your financial situation.
You can obtain a free copy of your credit report from the three credit reference agencies below.
(opens in new window)Equifax
(opens in new window)Transunion
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Please Note
You should ask for a “statutory report” and it's worth getting reports from all 3 agencies as they may hold different information.
You can read more about how lenders decide to give you credit on our advice website.
You should only borrow what you can afford to repay, as missed payments and high debts will lower your credit score. If you're planning on borrowing, you may want to slowly build up your credit history. You can find information on how to do this safely on Money Saving Expert’s website.
Bust Myths about Credit Scores
There are several common misconceptions about your credit score.
You can read about these common myths on Experian’s website.
Experian Credit Myths(opens in new window)