There are three steps to budgeting: 1. Calculate income 2. List expenses 3. Allocate a percentage of income to each expense
A budget should be designed specifically to suit the individual or family in question. It must be reviewed regularly and adjusted if necessary ( consumers, see p. 345).
Sample budget based on a net income of €600 per week for a family with one child
Expense
Rent or mortgage Food
Household expenses Clothing Entertainment
Medical expenses Emergencies Savings
% € per week 20% 20% 15%
Education and childcare 10% Travel
10% 5% 5% 5% 5% 5%
€120 €120 €90 €60 €60 €30 €30 €30 €30 €30
Rent or mortgage Food
Household expenses Education and childcare Travel
Clothing
Entertainment Medical expenses Emergencies Savings
Expenses for a single young worker would be different, as many young people share houses and the expenses involved, and do not have education or childcare to pay for. A retired older couple could have no rent or mortgage to pay.
Advantages of budgeting • Makes you feel more secure – fewer financial worries • A budget allows you to plan for major bills • There is less chance of overspending and impulse buying • Areas of overspending are identified quickly • Sets a good example for children • Allows for saving
The Money Advice and Budgeting Service (MABS) is funded and supported by the Citizens Information Board. It helps families and individuals who are having money problems.
Impulse buying means buying something on the spur of the moment.
