Budgeting means managing your spending so it is not more than your income. So, if you have £200 of income a week you should try not to spend more than £200. Before looking at your own budget try this one for fun.

Mr & Mrs Smith's budget
Mr and Ms Smith have one child of school age and a weekly income of £200. Which of the following items would they need to budget for? Think about which items are most important. And remember – they can only spend the money they have. So if they spend more than £200 they are not keeping their budget and they will get into debt! Try to decide if they really need something. To find out more you can take a look at the section below;
Things that I need – things that I want.

Activity: Drag 8 of the 10 items you feel are most important from the left to a free slot on the right. See how you manage to balance their budget and what happens when you can't pay for everything.

Personal budget
Activity: Now type in your own details:
You can add your own headings next to 'other1' etc on the 'income' column and also name your own headings under the 'outgoings' column

To draw up a more detailed budget for yourself try our Budgeter in the Workshops section.

Activity: Things that I need – things that I want
Everybody needs a roof over their head as well as food and clothes. There are also other things that you might need as well as those you think you need. Try to make a priority list by typing in the sheet on the right– put the things that you need the most at the top and the things that you want, but may not need, at the bottom.

So what do you need?
As well as a place to live and food to eat you also need electricity, water, a telephone, you need to pay the Council Tax and the TV licence. It is illegal to have a TV and not pay the licence!

Planning for the unexpected
Sometimes life throws up things that we didn't expect. Perhaps something needs replacing or repairing, or there may be an emergency. Lots of things can stop a budget from working. Keeping insurance as a priority expense may protect us against some situations such as burglary, loss or accidental damage. It is also a good idea to put a bit of money set aside for a rainy day.

Robbing Peter to pay Paul
The most important expenses are the ones which:

• keep a roof over your head (rent, mortgage, secured loan)
• keep you out of prison (Council Tax, court fines)
• keep you warm, fed and clothed.

You should try and avoid juggling payments. If there isn't enough money to go around and you have done all that you can then you should seek further help from an advice centre (e.g. the Citizen Advice Bureau). You could also see our Dealing with debt page in the Implications of finance section.

What about Christmas, birthdays and holidays?
The special times in life are also the most expensive. Try to spread the cost over the year. In January it may be a long time until next Christmas but there are some bargains in the sales. The important thing to remember is that your children won't be happy if they have nowhere to live! Presents don't have to be expensive and they should never be prioritised over rent, mortgage or other important expenses.

Before you rush out and get that loan remember that a loan this Christmas may mean less money next Christmas.

If you have to get a loan look carefully at how much it will cost overall and how much you have to pay each week.