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How Can a Budget Planner Help Manage Your Debts?

Budget planners can make managing debts feel less overwhelming. We look at how a household budget can help organise finances and direct money toward paying off debt.

Woman on a beanbag looking at her budget.

When you’re buried under a mountain of debt, it often feels like there’s more month than money left at the end of each pay period. Creating a thorough, well-organised household budget plan is the critical first step in gaining control over chaotic finances strained by debt.

A detailed budget template can help you track where every single pound of income goes each month, making it easier to find areas to cut back and align your spending with your financial goals.

This guide explores how to leverage comprehensive budgeting techniques to manage problem debts more effectively. We’ll outline budget planning resources and provide tips to help you take back control of your financial situation.

Key Takeaways:

  • Detailed budgeting establishes clear visibility into exactly where your money goes and can help you identify areas where you can save.
  • Digital spreadsheets, written forms, or specialised budgeting tools all help effectively capture and categorise essential expenses versus disposable income.
  • Consistently checking in on your budget at least monthly and setting scheduled calendar reminders builds budget accountability into your routine.
  • Refining your budget when your personal circumstances change will help ensure your plan remains accurate and relevant over time.
  • Defining specific "SMART" financial goals can keep you feeling motivated to diligently follow your thoughtfully crafted budget.
  • Budgeting is an essential habit for effectively gaining control of debts and can be used alongside other solutions such as debt consolidation.

How Can Budget Planning Help Tackle Debt Issues?

Budgets provide much-needed visibility into exactly where your hard-earned money is going each month, rather than making guesses or assumptions.

With every pound accounted for, budgeting allows you to make informed decisions on where best to allocate your income, so it lines up with your financial objectives. It also:

  • Ensures that your income can support your necessary living expenses as well as any discretionary lifestyle purchases, helping you avoid overspending.
  • Helps you prioritise essential spending, such as housing, utilities, insurance and childcare, so you can consistently meet these non-negotiable obligations.
  • Allows you to identify areas where cutting back discretionary expenditures can free up additional funds that can be redirected toward paying down debts.
  • Encourages you to be mindful of your spending behaviours and question whether purchases will support your financial goals, such as getting out of debt or building savings.

While simply making a budget may not magically fix all your monetary problems, it’s difficult to get out of debt without one. Having a well-constructed, realistic budget provides the essential foundation necessary to help you manage your money and create a path to financial freedom.

Budgeting Methods to Consider

Various budgeting approaches and systems exist. It’s important to find a budgeting style that best matches your personality and needs, and that makes use of the tools available to you.

01. Manual Pen and Paper Budgeting

For those who enjoy detailed data tracking and number crunching, nothing beats writing out your household budget and expenses. You can use a calendar, diary or printable forms and worksheets. The tactile process can help some people focus and retain information.

02. Digital Spreadsheet Budgeting

Using Excel, Google Sheets, or simple template programs gives you the flexibility to completely customise digital and formula-driven spreadsheets. If you’re tech-savvy, using spreadsheets allows you to monitor your changing income and expenses, create graphs, run projections, and model scenarios.

03. Budgeting Software and Apps

Various all-in-one digital budgeting solutions are available in the form of computer software and smartphone apps. These are designed to seamlessly sync with your bank accounts and automatically import and categorise transaction data. Minimal manual entry is needed after setup.

Some apps can even automatically transfer money for you, such as rounding up your purchases to the nearest £1 and transferring the extra into a savings account. Just be aware that many of these apps cost money, so be sure it will be worth the expense.

04. Cash Stuffing Envelope Budgeting

Some individuals find that it’s all too easy to accidentally blow your budget if all you need to do is insert a card or swipe your phone. If you relate to this, you may prefer working exclusively with cash where possible.

At the beginning of the week, withdraw all the cash you’ll need for the week and split it into physical envelopes labelled with budget categories to allocate out your planned spending money upfront. This period forces you to live within defined limits and encourages mindfulness before purchases.

05. Zero-Based Budgeting Philosophy

This strict approach assigns every single pound of net income earned a clear purpose as it enters your household. No money is left unbudgeted without a job to avoid unintended overspending leaks. Any extra gets poured into savings, debt payments, or upcoming expenses.

Rather than search for the mythic “perfect” budgeting method, choose an approach and tools providing the detailed spending insight, structure, and motivational accountability you need most based on your unique personality and financial circumstances.

Find a Budget Template That Fits Your Financial Situation

Many free budget template options and forms exist online. Some UK-specific budgeting worksheet resources to leverage include:

  • MoneyHelper - This government-backed money education site (previously known as the Money Advice Service) offers a free online budget calculator that can help you track your spending, savings and more. You can fill it out online and come back to view your saved budget plan as and when needed.
  • Citizens Advice - As a trusted nonprofit pioneer in impartial financial guidance, Citizens Advice offers plenty of budgeting tips, including an online budgeting tool and blank budgeting sheets which you can use to track your income and purchases.

The optimal template choice depends heavily on your preferred level of detail and categorisation as well as how hands-on you plan to be in maintaining your budgeting toolkit. The key is to write absolutely everything down, no matter how you choose to do it, so that no income or expense goes unaccounted for.

Key Sections in a Comprehensive Budget Planner

Let’s examine the key components and sections typically found within a thorough, robust budget planning form template:

01. All Sources of Income

Create dedicated lines to outline your salary, wages, benefits and all other documented sources of income. Always use conservative monthly averages for fluctuating income like overtime, bonuses, tips, or sales commissions.

02. Fixed and Discretionary Expenses

Break down and categorise ongoing expenses into fixed essential spending like rent/mortgage, utilities, groceries, insurance, transportation fuel and maintenance, childcare, minimum loan payments, etc. Also include current credit card and debt minimum payments.

Be realistic about tracking your average monthly spending on discretionary categories like dining out, entertainment, clothing, personal care, pet costs, club memberships, etc. Base these variable amounts on honest past average spending, not idealised assumptions.

03. Irregular and Periodic Expenses

Be sure to factor in rough costs for any irregular or periodic expenses, like annual car insurance payments, the festive season, holiday spending, etc. These are still predictable expenses critical for comprehensive budget planning.

04. Minimum Savings Goals

Even when aggressively tackling debts, try to budget a small amount of savings contributions each month. Building a financial cushion can help you avoid having to rely on loans and credit in future. Scale amounts to what’s truly possible for your situation, but do consciously include savings.

05. All Current Debts

Make an itemised table to account for each current loan, credit card, mortgage, or other debt balance. Note the interest rates, minimum payments, and target repayment timeline for each if you have a plan. Separate these into priority and non-priority debts so that you know which to tackle first.

06. Tallying the Bottom Line

Total monthly income less essential expenses, discretionary spending, savings contributions, and debt payments should leave you with at least some small projected cash flow surplus. If not, the budget isn’t yet properly aligned with realistic earnings and obligations. Keep adjusting amounts until you achieve a cash flow buffer.

Invest time refining your working budget template until it fully reflects your complete financial picture across both inflows and outflows. Gaining clarity on realistic cash flow is crucial before moving forward with any budget.

Set SMART Financial Goals Alongside Your Budget

To help stay motivated through budget struggles and ensure you use your budget as an effective actionable tool, take time to define targeted “SMART” financial goals:

01. Specific

Be precise in setting debt payoff amounts and dates. Define exact savings benchmarks.

Example:

“Pay off the NatWest credit card balance of £735 by July 31st.”

02. Measurable

Quantify goals.

Example:

“I am going to save £250 over the next 3 months for an emergency.”

03. Achievable

Set realistic, reachable goals you can accomplish through new budget diligence. Don’t sabotage progress with overly aggressive or unrealistic goals – you’ll find these hard to manage and may become demotivated when you don’t achieve them.

Example:

“I currently spend £500 per month on takeaway and restaurant food, I aim to cut this down to £250, rather than aiming to stop dining out altogether.”

04. Relevant

Align budget and expense goals closely with your current household financial priorities, whether aggressively paying down costly debts or proactively cutting expenses in non-essential areas identified in the budget like dining out.

05. Time-Bound

Give all goals a specific deadline or target accomplishment date to create needed urgency. Clearly schedule financial targets you want to reach by next week, next month, next quarter, and next year.

Example:

“By the end of this year I am going to have repaid all my credit card debt.”

Well-defined “SMART” goals keep you feeling encouraged and focused on consistently sticking to your thoughtfully crafted budget plan and money action steps.

Make Budgeting a Lifelong Habit

A budget only works long term if implemented with discipline month in and month out. Make consistency around the budgeting process itself an unbreakable habit:

  • When first forming a budget, review your actual expenses at least weekly to identify inaccuracies and adjust until amounts are tuned to your real spending levels.
  • Once the budget is refined, review it in detail monthly to ensure you’re staying on track.
  • Use handy spreadsheet formulas or budgeting app features when possible, to analyse your income versus spending quickly and easily. Look for ways to automate and simplify tasks to make life easier.
  • Set up electronic calendar reminders to prompt you to review your spending on a strict schedule. It’s easy to procrastinate budgeting when you are busy or avoid facing accountability.
  • As your income, expenditures or financial goals change over time, proactively revisit your budget to adjust your spending and keep your plan relevant to your lifestyle.

Building lifelong budgeting habits only comes through practice. But with dedication and commitment to the process, you’ll develop an important financial skill to help you manage your debts.

How Could Debt Consolidation Help?

If you are finding it difficult to manage multiple debts, taking out a consolidation loan could help simplify the budgeting process.

When juggling several credit cards or other debts, it’s easy to lose track of different due dates and interest rates. A debt consolidation loan combines everything into one: the funds from the loan are used to repay all your creditors in full, so you just have one payment to budget for each month.

If you qualify for a lower rate on the consolidation loan, you may save money on interest compared to higher-rate debts like credit cards. Consolidation loans also often allow you to extend the repayment term, which lowers the monthly payment amount, providing cash flow relief in the short term. However, keep in mind that stretching out the repayment timeline results in paying more interest over the life of the loan.

While debt consolidation can make budgeting and debt repayment more manageable, it’s not the right solution for everyone. Be sure to read the terms and conditions carefully and consider consulting with a financial advisor to weigh the pros and cons for your specific situation.

Apply with Consolidation Expert Today

Getting your finances organised and budgeted properly is the first step toward managing debt. But taking action to repay what you owe can be overwhelming. That’s where Consolidation Expert comes in.

Our experienced debt advisors work with you to understand your full financial picture. If consolidation is the right path for you, we’ll help match you with customised consolidation loans to fit your income, budget, and financial goals. Our lenders offer loans from £5,000 to £75,000, and work with a wide range of credit scores.

Don’t let debt weigh you down: take control of your finances with the help of Consolidation Expert. Apply online today to explore your options with our free initial application that checks your eligibility.

Representative 14.8% APR

We are a broker, not a lender.

Representative Example: Borrowing £15,000 over 60 months, repaying £355.28 per month, total repayable £21,316.57.

Total cost of credit £6,316.57.

Interest rate 14.8% (variable).

The lenders on our panel offer loans for 12-360 months, with rates from 4.7% APR to 42.6% APR.

The Representative Example is based on all loans paid out by lenders between 1st Jan 2022 and 31st Dec 2022.

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