Budgeting — Deep Dive Learning

Plan and manage spending with a real budget

What is budgeting?

  • A budget is a plan for your money.
  • It shows what money you have coming in and what goes out.
  • Budgeting helps you avoid running out of money.
  • Everyone can budget — it is a life skill.
  • You will learn to plan spending, find totals, and work out change.

Income and Spending

  • Income is money you receive — like wages, benefits or pocket money.
  • Spending (expenses) is money you pay out — like food, rent or travel.
  • If you spend more than your income, you run out of money.
  • A budget keeps spending equal to or less than income.

Adding Up Costs

  • To budget, you need to add up all your costs.
  • Example weekly costs: food £30, travel £10, phone £5.
  • Total: £30 + £10 + £5 = £45
  • If you have £50 each week, you have £5 left over.
  • Always check your total before you spend.

Saving Money

  • If your total costs are less than your income, the rest is savings.
  • £50 income − £45 spending = £5 saved.
  • Even small savings add up over time.
  • Look for cheaper options: own-brand foods, free travel with a pass.

Worked Examples

Example 1: Weekly shopping budget

  1. Budget: £25
  2. Bread £1.20, Milk £1.10, Pasta £0.80, Chicken £4.50, Vegetables £3.00
  3. Total: £1.20 + £1.10 + £0.80 + £4.50 + £3.00 = £10.60
  4. Remaining budget: £25 − £10.60 = £14.40

Example 2: Monthly bill check

  1. Income: £800
  2. Rent: £400, Food: £150, Travel: £60, Phone: £20
  3. Total outgoing: £400 + £150 + £60 + £20 = £630
  4. Remaining: £800 − £630 = £170 left over.

Practice Problems

  • You have £20. You spend £7.50 on food and £4.00 on travel. How much is left?
    Hint: Add the two costs first, then subtract from £20.
    Answer: £8.50
  • Weekly income: £60. Weekly costs: £45. How much can you save?
    Hint: Subtract costs from income.
    Answer: £15
  • Items cost £3.50, £1.20, and £2.80. What is the total?
    Hint: Add all three amounts together.
    Answer: £7.50

Challenge Question

Your weekly income is £320. You spend: rent £125, food £60, travel £35, bills £45. How much is left for savings and extras?

Hint: Add all your spending first, then subtract from income.

Answer: £55

Total spending: £125 + £60 + £35 + £45 = £265. Left: £320 - £265 = £55.

Common Mistakes to Avoid

  • Mistake: Forgetting to include all expenses
    Correction: Always list every cost before calculating what is left
    Why: Missing even one expense means your budget will look more positive than it really is.
  • Mistake: Confusing income with savings
    Correction: Income is what you receive. Savings is what you keep after spending.
    Why: Savings = income minus all expenses.
  • Mistake: Thinking overspending is fine if it is only a little
    Correction: Any overspend means you are in debt
    Why: If you spend more than you earn, you owe money. Even £1 over budget is a problem.
Start the interactive Budgeting lesson →