One of the most common questions asked by people when they are setting up a budget for the first time is what is a personal budget? Most people have no idea what a personal financial budget is, much less how to create one. A personal financial budget is simply a financial plan which allocate current personal income to current expenses, saving and debt repayment goals. Personal debt and past spending are only taken into account when developing a personal financial budget.
There are many different ways and tools available to develop, implement and adjust personal budgets. They include financial tools such as personal budgets, financial support plans and consumer-based support plans such as Pay As You Go (PAYG), Local Authority Budgets and Debt Management Plans amongst others. These tools can be adapted to individual requirements and can provide a good starting point for setting up a more bespoke personal budgets and financial support programs that suit your needs.
The first tool to consider is the Local Authority Budget. A local authority (local government) provides a framework for how the council provides services and sets policy within their areas of responsibility. The Local Authority Budget can be used to set and support individual budgets and can also be used in conjunction with other tools. The LAAB provides the basic framework for allocating expenditure and supporting strategic decision making processes within your local authority area.
The second tool is the Pay As You Go scheme. This is a credit payment scheme which has been successfully trialled in the UK. This scheme allows you to pay for items as you go but offers a flexible and secure borrowing option for the majority of individuals who borrow. A personal budget is based on your individual borrowing and income and this is determined by your local authority. This is a good starting point for those with no personal experience of budgets and setting up an informed support plan.
The third tool is the Personal Debt Advice Scheme (PDAS). This is an online service that provides budget support services in England and Wales from a non-profit body set up to provide impartial advice on all aspects of personal budgets and finance. The website provides a wide range of budgeting and debt advice services as well as a wealth of information on debt management. There is also a helpline for any issues regarding budget fraud or credit default.
The final budgeting support service is the Citizens Advice Bureau (CAB). Citizens Advice Bureau can also offer impartial, free advice in many areas of personal finance and budgeting. They are based across the country and can be contacted through their website, telephone number and door hours. The CAB also provides a nationwide helpline for any problems regarding budget, loans and financial advice. Some of the CAB’s areas of focus include: Employment and Support, Employment Law, Employment and Skills, Income Management and Benefits, Independent Living and Housing and Children’s Services.
All three of these services have different ways of providing the necessary information. For those without any experience of budgets or local authority processes, it can be difficult to understand what is covered and what is not. Having a simple set of instructions that are easily followed, can make a big difference when approaching these matters. Using a more detailed and hands on approach can be especially useful for those who may not be fully aware of the different ways to make an effective budget. The use of a local authority or an independent financial advisor will also ensure that the information provided is of a high quality and that those charged with creating the personal budget are fully trained and experienced.
Creating a personal budget can be very time consuming. There are many pages of receipts and bank statements to wade through before coming to any conclusions. This is where the local authority or an independent financial advisor can be invaluable. Using them to sit down and create a budget is much faster and less stressful than trying to do it yourself. They are also much more likely to make suggestions that will suit your individual circumstances perfectly.