Budgets are a very important part of the debt advice process & more generally for managing money well. When you are experiencing problem debt, it is important to find out where your finances are now, & where they need to be to manage your essential household & living costs better in the future. 

It's also important to look at your budget to see which debt option might be best suited for you.

It is pretty common for several budgets to be drafted during a debt advice enquiry before finalising one at the end.  Don't feel overwhelmed with this step because your debt adviser is skilled in helping you get the right figures together.

The important thing to have in mind is that the first budget you do needs to be your best shot, don't hide anything, & don't worry if it doesn't balance, this is common. 

Remember that the budget you put together for your debt adviser is confidential, & isn't going to be used with creditors, it needs a professional eye first. Don't be afraid to tell it how it is.

It can be difficult to think of everything that you spend money on, especially if you use cash machines regularly. If you're not sure about your regular spending, we recommend that you keep a spending diary. 

This does not have to be complicated, it can be notepaper that you carry around with you, or if you have reasonable access to a Wi-Fi connected device, there are some free online budgeting tools that might help:

Money Advice Service Budget Planner

Money Saving Expert

If you have bank accounts, your bank statements are a great place to start.

A lot of people dismiss this as a waste of time but you would be surprised how effective it can be to keep a track of your spending. It's then easier to see areas of spending where you could cut down. You also get a much more accurate picture of your finances.           

When you start putting your budget together, you might find it helpful to look at your bank statements & any cash machine withdrawals you make. If you have created a spending diary, you'll be able to identify areas of expenditure, such as food shopping.

The SFS tool is used to summarise your income & outgoings, along with any debts you owe. It's for people seeking debt advice, the SFS is mainly used by debt advice providers & other relevant organisations.

The SFS is not for public use. It's intended to become the only income & expenditure format used by the debt advice sector, replacing the many alternative financial statements currently in use. 

The SFS brings the following benefits:

• A single standard format for gathering income and expenditure

• A single set of Spending Guidelines

• Capacity to build a savings contribution into debt solutions

• Greater consistency to the debt advice process for consumer, advisers and creditors

• Potential for more streamlined sharing of data between organisations assisting an over-indebted individual

• Principles and best practice guidance for users

Money Advice Hub is licensed to use the SFS & will create an SFS version of your budget when required.

One of the main stages of debt advice is to find ways of improving your income and/or reducing your budget. Depending on your circumstances, it's not always possible to do this, but your debt adviser will explore all options with you. 

You can make your own start by visiting our web page 'Improving Your Household Budget'.

During your debt advice enquiry, you'll usually find that quite a few different budgets are prepared for you. This is because your income & expenditure is likely to vary & change throughout the debt advice process. 

For example, if you decide on a debt solution, this might affect what repayments you continue to pay. Similarly, if you receive a grant to repay a debt, your usual repayments for the liability will stop.