Almost 6 million (13 percent of) British people who pay bills admit they find it difficult to stick to a household budget - and over twice as many have ignored a household bill in the past because they couldn't afford it.
Budgeting needn't be a headache: with some planning and a bit of effort, it's perfectly possible to stick to a budget. Since the recession, budgeting has become almost fashionable - in fact, one particular current account has a dedicated budgeting service to help customers manage their personal finances - but more on that later.
About budgeting
Put simply, budgeting is the process of spending less than, or at most no more than, your income. Managing your personal finances wisely is extremely important if you're determined to avoid getting into debt. Budget really well and you may be able to put some money aside for savings.
If you can afford to stay out of the red every month - great! If you overspend every month, it's time to think about budgeting and your financial future! Anyone can learn how to budget:
How to Budget
- 1. Take your annual income and divide by 12 (for a monthly income) or divide by 52 (for a weekly income).
- 2. Take away the cost of regular bills / essential costs.
- 3. What's left is your spare money.
Basically, once you have your monthly budget, take away the cost of essentials, such as rent or mortgage, energy bills, water rates - the costs that must be paid every month. Do these add up to more than your income? If so, you may well be getting into debt and you should certainly think of ways to cut back.
If they add up to less than your income, you have spare cash, which you can spend on whatever you please. If you have a reasonable amount here, it's a good idea to set aside some money for savings. Following the recession, the government is keen for people to invest in savings and the limit for compensation has been raised to £85,000 (per person, per financial institution).
A Simpler Way to Budget
So you like the idea of budgeting and know how it would benefit you, but all that 'keeping track of your personal finances' sounds like too much hard work? You may be pleased to hear there's a budgeting account that could make things far easier for anyone who wants, or needs, to live to a budget - but isn't sure they can do it.
The budgeting account from thinkbanking
thinkbanking runs a current account that also works as a budgeting account. The clever thing about this account is that you don't really need to know how to budget, because there's a team of Money Managers to do most of the work for you.
You tell the Money Managers what you expect your income will be every month and everything that you need to pay every month. They will set aside money for your bills and put the rest into your 'Card Account'. That means you know the money in your Card Account is safe to spend, so you get the peace of mind that comes with knowing the important bills are already taken care of.
Bank fees that may work out cheaper
The way that the account is managed means you should never be charged for bounced payments again. If you're one of the many people whose current account bank charges add up to a significant amount, you may find the monthly fee for this budgeting bank account works out much cheaper - £14.50 per month for a single account plus a set-up fee of £25.
You can also get a joint account for slightly more - £30 to set up the account and then £19.50 per month.
You are not alone!
Research on behalf of thinkbanking found that 32 per cent of British people transfer money for bills to a second bank account and 11 percent put the money into someone else's account.
Rather than do it themselves, they might find the budgeting account from thinkbanking could make their budgeting much easier - as could the 5.6 million people (12 percent) who still put bill money in envelopes and jam jars!
As a thinkbanking customer, you'd have access to a UK-based team of advisers that you can call when you need to discuss your finances. You'd also have access to online banking services, so you can manage your account from the comfort of your own home. There's even an SMS banking facility that lets you manage your account via your mobile phone, helping you stay on top of your finances all the time.
You're not alone! If you'd like some help with your finances, this budgeting bank account is here to help. Apply for the thinkbanking budgeting account today - if you're a UK resident over 18 and you can provide proof of ID, your account could be approved within minutes. There's not even a credit check.