Penstripe Student Planner Catalogue 24-25 - Flipbook - Page 103
6
CHOOSE YOUR PENSTRIPE PAGES
TAX & BUDGETING
BUDGETING (1)
Tax & Budgeting
Budgeting
Make budgeting make sense
Needs vs wants
Whether you’re going on holiday, have plans with your friends or are ready to
move out to live independently, you will need to think carefully about what
you spend money on.
These are the things that are ‘needs’ for most adults:
■ Rent/mortgage
■
Food
■ Bills
■
Getting about
Your phone might be a ‘need’, but does it have to be the newest one? You
can shop around to find a good contract or pay-as-you-go options and save
money. Almost everything else is a ‘want’, from new jeans to a night out.
How to budget
A budget is a plan that lists the money you have coming in (from jobs or other
sources) and the money you need to, or want to, spend.
Copyright © 2025 Money Ready
Why should you bother tracking your spending? That’s simple: if you don’t
know where your money is going, you can’t control it. Keeping tabs on your
spending helps you:
■ Budget like a boss: Tracking your expenses gives you a clear picture of
your financial habits. This knowledge is your superpower when creating
a budget that works for you.
Description
Tax & Budgeting
Page Ref.
K-3
■ Avoid debt and build savings: By understanding where your money
goes, you can make smart decisions about how to save more and steer
clear of falling into debt.
■ Achieve financial goals: Whether it’s saving for a dream holiday, a new
gadget, or your future university education, knowing your spending
patterns will help you make steady progress towards your goals.
Four steps to making a budget
Step 1: Calculate your income
The first step in creating a budget is to figure out how much money you have
coming in. This might include pocket money or part-time work. Make a list
of all your income sources and add up the total. This will be the amount you
have to work with when planning your budget.
Step 2: List your expenses
Now, let’s look at your spending. List all your expenses, including both fixed
and variable costs. Fixed costs are those you must pay regularly, such as your
phone bill or travel. Variable costs, on the other hand, are more flexible and
can change from month to month. These might include going out to eat, or
shopping for non-essential items.
Try to be accurate, and where you’re not sure, try to guess more, not less, so
that you have money left over, rather than ending up short. You can also try
keeping a spending diary for a week to see how much you might spend on
average in any seven days.
Step 3: Create your budget
With your income and expenses in mind, it’s time to create your budget.
Here’s how to do it:
Prioritise essentials: Start by covering your fixed costs. These are your
priorities because you need these for your everyday life. Make sure you
allocate enough money to cover these expenses.
Manage your other spending: After covering essentials and saving, you can
allocate the remaining money for other expenses. This is where you decide
how much to spend on having fun, eating out, or shopping. Try not to get
overexcited here and stick to the budget you’ve set.
Step 4: Review your budget regularly
Don’t worry if at first you don’t stick to your budget. This is common, because
as you work through steps 1-3 you’ll likely have to make some guesses. The
key to making a budget that you can stick to is reviewing it at the end of each
month and making small changes until it works for you.
Description
Budgeting (1)
MONEY READY ONLY AVAILABLE AS A COMPLETE 8 PAGE SECTION
103
Design Right and Copyright © 2024 Penstripe
Page Ref.
K-4
Copyright © 2025 Money Ready
This rate of tax applies to anything that isn’t seen as being absolutely
essential, so that’s everything from cinema tickets to computer games and
treat foods such as crisps and ice cream.
However, some items have a different Value Added Tax amount applied,
known as ‘reduced VAT’, which means only 5% VAT is paid on top of the actual
cost. These items include household energy and heating, children’s car seats
and mobility aids for over 60s.
For things that are seen as absolutely essential, including most foods,
medicines and children’s clothes, a ‘zero rate’ VAT is applied. This means that
no VAT is charged.
When VAT is charged, it helps to pay for the services also covered by income
tax.
Most car owners pay Road Tax (Vehicle Excise Duty) to the DVLA (Driver
and Vehicle Licensing Agency) as well. This goes towards the cost of road
maintenance and safety measures such as improved road signs. Car owners
can choose to pay this tax monthly, every six months or annually.
