Where Does All Your Money Go?
In a world where you’re increasingly required to take responsibility for your financial affairs, you need to be able to manage your money well. This section contains some useful tips to help you manage your money more effectively, simple explanations of financial matters and some very useful tools which will help you understand your current financial situation and help you to plan for the future and reach your financial goals.
The Money Advice Service provides free, unbiased advice to help everyone make the most of their money and take the right financial decisions. You can get advice on managing your money and try the Money Advice Service Healthcheck tool.
You can also get advice over the phone on 0300 500 5000.
The Money Advice Service website has a number of interactive money planners which you might find useful.
Where Does All Your Money Go?
The first step to managing your money is to know exactly how much money you have coming in and how much you have going out.
Understanding Your Payslip
Do you understand all the numbers on your payslip and know what they mean? There are details that identify you, such as your employee reference number, National Insurance number and National Insurance code (which tells your employer how much National Insurance you need to pay). And there are details about how often you get paid (weekly, monthly), and how (into your bank account or other).
But the most important detail we'll want to know is how much we are actually getting and this is shown as follows:
| • | Gross pay: the total you have earned in the current pay period before deductions. |
| • | Deductions: shows all deductions for the current pay period such as PAYE tax, National Insurance, student loan repayment and pension contribution. |
| • | Net pay:your take-home pay (the actual amount of money you end up with after deductions) for the current pay period. There can be a big difference between your gross pay and net pay. |
Your payslip also shows your yearly pay before deductions, total gross pay and deductions to date and tax period or month.
At the end of each tax year your employer will give you a P60 certificate. This is your total pay before deductions in the previous tax year and how much tax and other deductions you have paid of allowances you have received. You will need your P60 if you have to fill in a tax return or claim benefits. Make sure you keep your payslips and P60 certificate in a safe place.
Planning Your Budget
It is very important to keep track of your money especially if you are struggling to make ends meet. If you haven't done so already, you should take the time to work out where all your money comes from and where it goes - using a budget calculator might help you do this.
Try to make time to review your budget regularly. And remember to look at it again if your circumstances change or your debts start building up.
And don't just think about the present - thinking early on about how your needs might change in the future can help to prevent problems occurring later on.
If you want to have a go at calculating your budget, check out the Money Advice Service
budget calculator
Or you could print off a copy of the Self Help Debt Pack.