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Budgeting

Before you can start repaying your debts, you need to know how much money you have coming in each week or month, and how much you will spend on living expenses. That's where budgeting comes in.

Tip:If you haven't already looked at the section of this site on Spending and budgeting you should work through it before you read the rest of this section.

In the Spending and budgeting section, you may have used the Budgeter. You'll be using it a lot in this section too.

Tip: some of your bills, and perhaps some of your income, will be in monthly amounts, and the rest in weekly amounts. To change a monthly amount to a weekly amount, you can multiply by 12 (months in a year), then divide by 52 (weeks in a year). This gives a more realistic figure than dividing by 4. You can use the pop-up calculator to work these out.

Case study
Julie and Rajesh;

• live in a two-bedroom flat which they bought with a mortgage from their local building society.
• have one child.

Julie works 28 hours a week for a bank, but Rajesh has been made redundant from his job.

Here's their personal weekly budget. Look at the range of things included in the expenditure section. Do they apply to you? Can you think of anything you have to pay for that isn't included here? Make a note of them.

Activity: Now, use the Budgeter to work out your weekly budget (see an example of using the budgeter above). For the time being, even if you've got arrears on your rent or mortgage, or other debts, just put in the amount for the regular payments.

Tip:Every time you make a new budget, or make changes to an existing one, remember to print it out when it's finished, so you have a copy to keep.