It can be hard living on a tight budget. If you only just afford all of your bills and other financial commitments every month and you’ve not got any money left over, it could take just one unexpected bill to push you into the red.
That’s why you might take a second look at your budget and to put aside some disposable income for the end of the month to cover any extra bills. Let’s find out how you could do this, as well as much you should have left at the end of the month.
Adding up the bills
Start by looking at your budget to see how much you’ve got coming in and what you’re spending it on. If you’ve not got a budget, you can draw one up quite easily.
Write down your total monthly income, including any benefits or bonuses you get. Next, make a list of all of the bills you have in the month – from rent or mortgage to utilities, council tax, insurance and anything else. Subtract your outgoings from your incomes and the money leftover is your disposable income. For more help putting together a budget, check out our definitive guide to budgeting.
If you’ve not got as much disposable income as you’d like, see if you can cut back on any areas of your spending. For example, if you’ve got a gym membership but you could go running in the park you could think about cancelling this. Or if you have a lot of takeaways each month, see if you could make more meals at home.
There’s no set amount of disposable income you should have every month – it really depends on what you’re saving up for or what your financial situation is like in general. Research* carried out for us in 2014 that adults have an average monthly disposable income of £187.03. That doesn’t mean you need to worry if you’ve got more or less than that though.
If you only have around £10 left after you’ve paid your bills, you might be at risk of going over budget. If just one of your bills gets more expensive or you’ve got an extra expense to cover one month, you might look at resorting to credit to afford this.
You could also look at a budgeting account like the thinkmoney Personal Account. It sets aside all of the money you need to cover the bills you’ve told us about, so you can’t spend this. We’ll then move the leftover money to your card so you can spend it on whatever you want, safe in the knowledge that the important bills are covered.
The thinkmoney Personal Account comes with a monthly management fee of £17.50 – find out more about it here.
*OnePoll questioned a nationally representative sample of 2,000 adults aged 18 and over between 19th December and 30th December 2014, of whom 635 were in Scotland.