Britain goes back to basics with household budgeting

With the days of easy credit and stress-free spending now a distant memory, Brits are fighting against the squeeze and trying to control their money by going back to old-fashioned budgeting, according to research from the PayPal Top Up Card.

Over half (57%) of people say that they now budget more strictly and more frequently compared to 12 months ago, and while the majority (62%) set or review their budgets on at least a monthly basis, a diligent 3.8 million (8%) do this every single day, to ensure their finances balance. As well as tightening up their budgeting habits, one in six (15%) say that they are not making long term spending plans at present, another indicator of the impact that the economic downturn has had on Brits over the last year.

The research by the PayPal Top Up Card also found however that while many of us (42%) claim to come in ‘on budget' each month, one fifth (20%) still have to rely on credit cards or long term savings to meet basic living costs at least once a quarter. This might be explained by the fact that less than a third of people (29%) include all their expenditure in their budgets, and almost two thirds (59%) plan only essential expenditure (bills, living expenses) - but not any of the extras such as clothes, socialising etc.

Carl Scheible, Managing Director of PayPal UK commented, "British households have seen their financial commitments change significantly over the last 12 months and with energy prices soaring, mortgage payments still high and the cost of food increasing at a record pace it is encouraging to see people reacting to this by trying to keep their financial ‘house' in better order. However, as our research shows, setting a budget and then sticking to it are two very different things. It's concerning that so many people claim to keep to their budget, yet still rely on credit cards or savings for basic living costs. The consequences of this kind of strategy are soaring credit card bills and no savings to fall back on, which is dangerous territory."

With half (50%) of people who budget saying that they find it stressful in some way, it's not perhaps surprising that among the 9 million (19%) who don't budget, almost one in 10 (9%) say they find it too difficult or daunting and a small minority say they don't know how to. They could however take a leaf out of the book of those who budget simply using a pencil and paper (50%). Once people have worked out how much disposable income they have each month, one option for sticking to a controlled weekly spend is using a pre-paid card to load up a specific amount, which cannot be overspent.

Scheible continues, "Setting a budget to keep track of living expenses is a sensible move for anyone in this climate and it needn't be overly complicated to do. Whether you budget on monthly, weekly or even daily basis, the key is to try and include all your expenditure as far as possible, so that you avoid being caught out.

"Using a pre-paid card, such as the PayPal Top Up Card, can help to control spending as you can load a set amount (as dictated by your budget) onto just one card and then leave all other cards at home. The temptation to overspend is removed as there is no room for excess spending on a pre-paid card and as such, sticking to your budget will be that little bit easier."

Top 5 tips for successful budgeting from the PayPal Top Up Card

Write down all your necessary expenditure - all household bills, travel expenses etc. Be realistic and include everything that must be paid each month.

Work out how much you have left after all the necessaries have been paid - then split this down in to a weekly (or even daily) budget for your disposable income.

Don't be caught out by quarterly or annual payments - look ahead and allocate additional money each month to a separate account so that you have the money already set aside when the bill comes in.

Think ahead - if you know you have social events coming up that will cost a certain amount, plan for these; it may mean cutting back in the weeks before, but it will mean you are able to enjoy yourself much better in the end.

Think about ways to supplement your disposable income; if you have things around the house that you no longer want, but that are in good condition, consider selling them on eBay - and transfer the balance from your PayPal account to your PayPal Top Up Card, so you can spend it on or offline!

To apply for a PayPal Top Up Card please log onto paypal.co.uk/topupcard