How to budget and organise your finances in 2022

Create a money plan to balance your bills and spending

Budgeting and organising your financial life might seem like a daunting task but once you’ve done it you’ll have much greater control over your money. Crucially, you’ll be able to find out if you’re spending more than you earn – a situation that can ultimately make debt unmanageable.

Knowing exactly where every pound is spent is a powerful way to stay financially stable, so start 2022 with a detailed budget and a better overview of your finances. With so many budgeting apps around you can make a budget on your smartphone, check your finances on the move, and adjust your spending accordingly.

So what should you do to be financially organised in 2022?

Gather your paperwork together

To make an accurate budget you’ll need:

• At least three months’ worth of bank and credit card statements
• Details of all household expenditure, including utility bills, insurance policies, phone and broadband, and council tax
• Information on any savings and investments
• Wage slips for the last few months, plus any pension contributions
• Information on other sources of income, such as state benefits

Divide your budget into different categories

Categorising your budget means you can see at a glance how much you’re spending each month on items such as food, your car, household costs, insurances, clothing, and entertainment.

The same applies for your income – this might include regular employment earnings after income tax and National Insurance have been deducted, freelance income, regular state benefit payments, or interest on savings or investments.

If you also highlight your essential outgoings - mortgage/rent payments, fuel, council tax, and other household bills – you’ll see the minimum amount you need each month to cover top priority bills.

Include annual spending

It’s important to include birthdays, holidays, and Christmas spending in your budget, as well as the smaller expenditures you make on a regular basis, such as work lunches or magazine subscriptions.

It’ll provide a realistic picture of the money you spend, and help you avoid inadvertently living outside your means. Spending more than you bring in might not seem like a problem in the short term, but it can lead to a debt spiral that’s almost unnoticeable at first.

The additional interest and charges made by credit card companies can quickly make even the minimum repayments unaffordable. So when you’ve incorporated all spending and income, you need to balance your budget.

Balancing your budget

Once all the figures are included you’ll find out if you’re spending more money than is coming in. Alternatively, you might have residual income that you didn’t realise was available, and be able to use it to pay off more debt or save/invest.

Whatever the outcome, budgeting reveals the true picture of your finances. Crucially, you’ll see if you’re getting into too much debt and be able to take the necessary steps to avoid serious financial difficulty in the future. 

If you need to cut your costs, switching providers can save you money. Online comparison sites are an easy way to check if you’re overpaying on energy, for example, or broadband. In fact, switching can help you make significant savings over the course of a year.

How to keep your finances organised in 2022

• File away your financial paperwork in a dedicated binder so you know where it is if you need it
• Regularly check your credit file - boosting your credit score can open up access to financial products with more favourable terms, such as mortgages
• Pay your bills by direct debit or standing order so you don’t need to think about them
• Automate your savings
• Be aware of financial scams and identity theft, particularly if you bank online

For more help with budgeting and organising your finances, get in touch with our expert team at Scotland Debt Solutions to arrange a free, same-day meeting. We can offer professional advice and support on managing your money and dealing with debt.