How do I prepare a Personal Budget Sheet?

A Personal Budget Sheet (PBS) will help you budget your money and explain your financial situation to your creditors. In order to prepare a basic PBS, follow the six steps below.

If you need further guidance or help, contact a debt adviser who will be able to assist. You will find details of some organizations that provide debt advice in the Further information section. You will also see details of some online budgeting tools and downloadable templates.

Personal Budget Sheet 6 Steps

Step 1 – List monthly income
Step 2 – List essential expenditure
Step 3 – Calculate monthly surplus
Step 4 – List and negotiate with priority creditors
Step 5 – List non-priority debt
Step 6 – Calculate fair offers

Step 1 – List monthly income

For each item on the list, write down how much you receive each month.
If you do not get paid monthly you will need to do one of the calculations in below to work out the monthly amount. Once you have listed them all, add them together to work out your total income

If you get paid weekly:
Income (£’s) x 52 ÷ 12 = £’s per month

If you get paid fortnightly:
Income (£’s) x 26 ÷ 12 = £’s per month

If you get paid every 4 weeks:
Income (£’s) ÷ 4 x 52 ÷ 12 = £’s per month

If you get paid quarterly:
Income (£’s) ÷ 3 = £’s per month

Make sure you include:

• Income from any employment
• All benefits
• Tax Credits
• Pensions
• Maintenance
• All other income you receive

Example

Paul is living with schizophrenia and claiming Employment & Support Allowance (ESA) and Disability Living Allowance (DLA). His ESA is paid fortnightly at a rate of £210.10; his DLA is £207.40 every four weeks. He needs to work out his total income per calendar month (pcm), so will do the following calculations:

ESA £210 per fortnight
£210.10 x 26 ÷ 12 = £455.00pcm

DLA £207 every 4 weeks
£207.40 x 13 ÷ 12 = £224.68pcm

He can now add these two figures together to work out his total monthly income

ESA £455.00
DLA £224.68
Total £679.68

Step 2 – List essential expenses

Write down everything that you need to spend money on each month. You may need to use the same calculations that you did in the income section to work out monthly figures. Once you have written down all of your expenses, add them up to work out your total monthly expenses. Do not include payments to debts.

Include:
•Rent / mortgage / secured loan
•Service charge
•Council Tax
•Gas / Electric / Water
•Care and/or mobility costs
•Home insurance
•Food
•Phone bill
•TV Licence
•Clothing
•Hobbies
•Child care costs
•Cleaning products
•Travelling expenses

If you are unsure how much you spend on anything, try checking your bank statements for clues. If that doesn’t help you may need to have a rough guess, but try to be as accurate as possible.

Example

Paul has the following monthly expenses

Gas £45
Electricity £40
Water £25
Food £180
Care costs £150
Cleaning and personal care £30
Travelling expenses £40
Clothing £15
TV Licence £12
Telephone / internet / TV £40
Hobbies and leisure £40
Money for emergencies £10
Christmas & birthday fund £5
Magazine subscription £5

Total expenditure £637

Step 3 – Calculate monthly surplus

Your surplus income is what you have left over after all of your essential expenses are paid. Subtract your total expenditure from you total income to work out your surplus

If you have debt you should use any surplus income to make repayments. If there is no surplus income to offer creditors you should speak to a debt adviser to find out what options are available.

You can find more information on this in our ‘Options for Dealing with Debt’ section.

Example

Paul can now work out what he can afford to pay his creditors by subtracting his total monthly expenditure from his total monthly income

Total income £679.68
Total expenditure £637.00
Surplus income £42.68

Step 4 – List and negotiate with priority creditors

Include:
•Rent /mortgage or secured loan arrears
•Council tax arrears
•Gas / electricity arrears
•Magistrates court fines
•Tax arrears
•Benefit overpayments
•Hire purchase arrears
•Child Maintenance arrears

Priority creditors should be contacted as soon as possible. If you need time to get advice, let them know, they may be able to freeze any action for a short time while you get help. Provide them with a copy of your budget sheet and any other relevant information that helps explain the situation.

If you have priority debts there is a risk of losing something. It is important that you speak to a debt adviser to ensure they are dealt with appropriately. Contact details of various organisations that provide debt advice can be found in the Further information section.

Example

Paul had electricity arrears totaling £140 and gas arrears of £60. He contacted a debt adviser who reminded Paul that non-payment of these debts, could lead to disconnection of his fuel supply.

The debt adviser helped Paul complete a personal budget sheet, which showed he has £42.68 surplus income available. She suggested that he make an offer that would clear both debts in 6 months. Paul contacted the suppliers and offered to pay the following amounts on top of his ongoing monthly payments.

Gas arrears: £10
Electricity arrears: £25

These offers are accepted. Although this only leaves £7.68 for non-priority debts, Paul’s fuel debts will be paid in 6 months, at which time he can increase the repayment of the others.

Step 5 – List non-priority debts

Make a list of all of your non-priority creditors and write down how much you owe to each individual debt. If you have taken advice and made arrangements to repay any priority debt you have; and you have remaining surplus income, you can calculate fair offers to repay non priority creditors.

Include:

• Credit Cards
• Overdrafts
• Unsecured Loans
• Catalogues
• Water arrears
• Debts to family and friends

Step 6 – Calculate fair offers

All non-priority creditors should be treated fairly, so if you have money to offer, each should get a fair proportion based on the amount owed. The best way to do this is with a pro-rata calculation.

Pro-rata calculation

In order to calculate fair offers to your creditors you will need to know:

• How much you owe to each debt
• Your total debt (to all non priority creditors)
• Your surplus income (after priority debt arrangements)

To work out how much you should pay to each creditor, follow the calculation below for each of your debts:

Surplus income x each individual debt ÷ total debt = pro-rata offer

Example

Paul has 3 non priority debts totalling £600. He owes £150 water arrears, £350 on a credit card and has £100 overdraft. He has £7.68 per month to repay his debt.

To find out how much he should pay to each creditor, Paul needs to do the following calculations:

Water: £7.68 x £150 ÷ £600 = £1.92
Credit card: £7.68 x £350 ÷ £600 = £4.48
Overdraft: £7.68 x £100 ÷ £600 = £1.28