How to plan an effective budget Six budgeting tips for balancing your household finances

Budgeting problems: over-spending

If you're over-spending, it's time to re-balance your budget

If you're currently spending more than you earn, it's crucial to find a way to balance your budget. 

Those who don’t address the situation could find themselves in a downward financial spiral that’s difficult to escape.

Here are six handy budgeting tips to help you balance your earnings and outgoings.  

Find out more: 50 ways to save money - more tips to boost your bank balance

1. Boost your budget by saving on essentials

If your budget doesn’t balance or you’re looking to free up some extra cash, the first thing you should do is try to cut the cost of essential household goods and services. The changes you make aren’t likely to make you feel deprived – but they will help to keep more cash in your pocket.

Cut your energy costs

Gas and electricity companies rarely offer loyal customers the best deals, so there’s every reason to check whether a different supplier could offer you cheaper energy.

People who switched energy providers with Which? Switch between 1 January and 30 April 2015 saved an average of £301 a year on their bills.

Find out more: Which? Switch - compare gas and electricity prices

Haggle to cut your bills

Meanwhile, don’t just accept the renewal quotes you receive for utility bills and insurance products such as car insurance and home insurance. By sticking with the same insurer year after year, you’ll miss out on the best deals, which are typically only available to new customers.

Find out more: Haggle to cut your bills - learn how haggling could save you £500 per year

2. Cut the cost of your debts

Consider transferring your credit card balance

If you have existing debts – particularly on credit cards – these are likely to be an expensive drain on your budget. With most credit card providers charging typical APRs of up to 19%, owing even a modest amount on your plastic could cost a significant sum in the long run.

Taking out a 0% balance transfer credit card could cut your interest costs dramatically, allowing you to pay off your debt more quickly. In turn, this will speed up the process of balancing your budget.

However, it's important to clear your debt before the end of the 0% period to avoid being charged at the standard APR on the remaining balance. 

Find out more: What is a 0% balance transfer credit card? - how these credit cards work

Consolidating debts with a loan 

If you’re thinking of applying for a loan to consolidate existing debts, you should ensure you have a plan to pay off what you owe. Sometimes people who try to bring all their borrowing together in one place continue using their credit cards, ending up in a far worse situation than before.

Find out more: Your loan options - a round-up of the very best deals on the market 

3. Assess your leisure spending

If your budget still doesn’t balance, it’s time to cut back on non-essential spending. This means prioritising the activities you get most enjoyment out of, and spending less on those that aren’t offering you good value for money. How far you have to cut back your leisure spending will depend on your personal situation.

Spending less on going out and buying new things isn’t easy – but not cutting back now might mean you’re in an even more difficult position later. Remember, if your budget is out of balance in the long-term you’ll end up with debts that could be expensive and may take a long time to clear.

4. Make use of personal budget planner tools

While some people might prefer to use pen and paper to create their budget, others will want to take a more technical approach to tracking their spending.

Personal finance software

Personal finance software programs can be loaded on to your home computer or laptop. The best software will allow you to produce a monthly budget and create diagrams to illustrate your spending, as well as track the status of your bank accounts, savings and investments.

Money dashboards and account aggregators

Money dashboards and account aggregation websites, such as or, allow you to view all your account balances in one place, so there is no need for you to log into several different sites (or dig out various sets of paperwork).

Online and downloadable budget planners

Online or downloadable budget planners help you create and track your monthly spending plan and you can often create a personal account without having to provide bank details or passwords.

5. Generate extra cash where you can

To complement cutbacks in your spending, consider new ways to increase your income.

First and foremost, if you have savings and investments you’re relying on to generate part of your income, make sure they are performing as well as possible. Use the Which? Savings booster tool to find out how much extra interest you could be earning on your cash.

In addition, consider freelance work if your employment contract allows it. Are there ways you could use your skills to generate a little extra income by working in your spare time? (Don’t forget that if you do earn money through freelancing, you’ll need to fill in a self-assessment tax return.)

You could also sell unwanted items via eBay, consider renting out your spare room or even sign up to rent out your car when it isn’t in use.

Even simple changes to your routine, such as using a cashback credit card instead of your debit card for everyday spending, or making online purchases via a cashback website, could help you generate hundreds of pounds extra each year.

Find out more: 50 ways to make money - our all-inclusive money-making guide

6. Get debt help if your budget won't add up

If you’re still struggling to balance your budget after cutting back on spending and are concerned about the amount of money you owe, it’s important to seek help as soon as possible. Spending more than you earn each month isn’t sustainable in the long-term, and will push you further into debt.

There are free debt advisory services that will help you assess your situation and come up with a plan for dealing with your debts. Read the Which? How to deal with debt advice guide for more information, and the contact details of debt help organisations we recommend.

Our experts would always advise steering clear of commercial debt management companies, which will charge you a fee for the same services you could get free from charities such as the StepChange Debt Charity (formerly the CCCS), National Debtline or Citizens Advice.

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Which Ltd is an Introducer Appointed Representative of Which? Financial Services Ltd, which is authorised and regulated by the Financial Conduct Authority. Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited. Your home may be repossessed if you do not keep up repayments on your mortgage.