How do I calculate my monthly living expenses?
September 14, 2016
If you’ve entered into a Scottish Trust Deed or other personal insolvency procedure, and are worried about how you’re going to manage the bills, making a budget is one of the most important steps to take.
Although it takes a little time and effort, once finished it will make everything much easier to manage, and can literally transform your outlook on life during this stressful time.
So let us help you build a budget that keeps you in control, ensures sure you have enough money for life’s essentials, and prevents you sliding into further debt.
A detailed budget is the key
The first step in making a budget is to collect together all your household bills for the past year, as well as bank statements and receipts for your living expenses. Some of the categories below give an indication of the general limits set by insolvency practitioners, to help you to complete the budget.
Here’s what you’ll need to include:
Multiply a weekly rent by 4.33 to arrive at the figure you’ll need to include in your monthly budget.
Electricity and gas
Energy costs can be difficult to calculate as they vary over the months, so the best way to approach this is to work out how much you’ve spent on energy in the past year. You can then divide this figure by twelve to reach your average monthly payment.
Water bills can be paid monthly, half-yearly (divide your bill by six) or once a year (divide it by 12).
Payment options for council tax are generally once a year, or over 10 or 12 instalments. Paying over a full calendar year rather than having a payment break for two months could ease your cash flow, however.
All mortgage lenders require buildings insurance, but it’s also important to have contents insurance in the event of a fire, or burglary for example.
Landline, mobile and internet provider
The general limits for your budget are:
£46-£54 single person
£57-£70 couple, no children
£6-£7 for each child
You’ll also need to include the cost of your TV licence.
This category includes the cost of food, as well as cleaning products and toiletries:
£100-£200 single person
£185-£325 couple, no children
£55-£80 for each child
Clothing and footwear are considered luxury items, and the maximum allowed for is:
£12-£30 single person
£22-£47 couple, no children
£9-£13 for each child
Meals at work and school
The allowable budget for meals at work, and for your children in school, is around £36 for adults and £35 for children.
Travel and transport
If you travel by public transport, multiply your daily cost by the number of days you travel during the month. Car owners will need to factor in a range of costs, including:
- Petrol: £130-£167 single person, or a couple with no children
- Road tax: £17 per car each month
- Car insurance
- Maintenance: £22 per car per month, including servicing
Travel to school by public transport can also be included. To arrive at an accurate monthly figure, take the daily cost and multiply by five, multiply this figure by 38 (the number of weeks in an academic year), and then divide by twelve to reach your monthly budget figure.
The cost for food and pet insurance should not be more than £23 per month.
Childcare and child maintenance payments
Paying weekly for childcare or child maintenance means you need to multiply the figure by 4.33 to reach an accurate monthly amount.
Rental of white goods/TV
Budget according to the figure on your contract.
The limit for prescriptions equates to one prescription per month, and for dental and optical treatment it is:
£14 single person
£15 couple, no children
Home maintenance and repairs
This should cover the cost of emergency plumbing, for example, or servicing/maintenance of your boiler:
£15 single person
£25 couple, no children
A very small budget is allowable for entertainment/hobbies:
£11-£17 single person
£16-£22 couple, no children
£6-£11 each child
Contingency for emergencies
A pot for minor emergencies such as having to take a taxi rather than the bus, should be included in your budget.
Miscellaneous items could include buying a newspaper, or the cost of laundry/dry cleaning. Limits are set at:
£10 laundry/dry cleaning
£5 newspapers and magazines
For more help in developing your budget, call one of the team at Scotland Debt Solutions. We work to help Scottish residents escape debt, and have four offices around the country.
The start of a new year is the perfect time to take stock of your finances and put plans in place for a financially savvy year ahead. While you may feel your problems are insurmountable, there are always things you can do to help, most of them surprisingly easy. Here are 7 ways you can […]
If you have credit card debt which is attracting a high level of interest, moving this balance onto a lower interest card could save you a considerable amount of money. This process is known as a ‘balance transfer’, and if done correctly, this process could save you money and also reduce the time it takes […]
Many thousands of young Brits are being actively encouraged towards taking on debt and spending borrowed money even before they reach their 18th birthdays. That’s according to the price comparison website comparethemarket.com, whose research suggests that roughly one in four 16 and 17 year olds in the UK have been offered credit cards or asked […]
If you’re in serious debt with no hope of repaying your unsecured creditors, you don’t have to wait for a creditor to take legal action against you. You may be able to take matters into your own hands and apply for sequestration (bankruptcy in Scotland). This also prevents your situation from worsening. There are two […]
If you’re looking to save some money it’s a good idea to make a detailed budget that lets you see where your cash is currently being spent, and offers an overall view of your finances. You’ll need to collect together your income and expenditure details, including annual costs such as insurance, car expenses, birthdays and […]
Scotland has a number of formal debt solutions that can help you deal with a difficult financial situation. It’s advisable to take action as soon as possible, however, to prevent your levels of debt escalating when interest and other charges are added. Obtaining professional advice is key in this respect. An approved money advisor or […]