Making a budget

A budget sets what comes in each month against what goes out, including a monthly share of the bills that come only once or twice a year. To make one, gather your payslips, your rental contract and your insurance papers. List your regular income, then your fixed costs, your household and personal spending, and the amounts you set aside for yearly bills and the unexpected. If more goes out than comes in, cut variable spending first, then fixed costs. If it still does not balance, or bills are already late, get help early: the hotline of the debt advice services, 0800 708 708, is free and answers Monday to Thursday from 10:00 to 13:00.

If bills are already late

A budget helps, but it is not the first step when reminders are piling up. Get advice now, alongside the budget:

Budgetberatung Schweiz, the umbrella organisation of budget advice services, gives a rule of thumb for choosing: a budget advice service if you have lost track or want to plan your budget again, and a debt advice service if you see that paying off your debts would take you longer than three months. Our guide debt help in Switzerland explains the options, and missed a loan payment covers a loan that is behind.

What you need

Budgetberatung Schweiz starts its checklist with the papers:

• your payslips or salary statement, for what you earn
• your rental contract, for what the flat costs
• the documents for your insurance and subscriptions, for the costs that run every month or every year

Add your bank and card statements for the last few months. They show what you really spend, not what you think you spend.

Making your budget, step by step

1. Your income. List every regular income: wage, allowances, maintenance. Income that does not come every month, such as a bonus, is best counted over the whole year. Budgetberatung Schweiz’s examples leave a 13th month’s pay out of the monthly income.
2. Your fixed costs. List what you pay every month and every year: rent, taxes, health insurance, other insurance, phone and internet, transport, and every loan, leasing contract or card balance you are paying off. For each yearly bill, work out the amount to set aside each month.
3. Household and personal spending. Food, clothes, leisure and the rest. Use the example budgets of Budgetberatung Schweiz as a guide (see below), or note what you spend over a longer period.
4. Reserves and savings. Set something aside every month for the unexpected, such as a repair, and plan a fixed amount to save that fits your budget.
5. Check the result. Is anything left at the end of the month, and do you know what it is for? If you spend more than comes in, go through the budget again and look first at variable spending, such as leisure and shopping.

Budgetberatung Schweiz offers templates, as PDF and Excel files, an online budget calculator and a free app.

What to count

Count every cost, including the ones that come only once or twice a year. Budgetberatung Schweiz’s examples sort them into fixed costs, the household, personal spending, amounts set aside, and what is left over. A loan, a leasing contract or a card you pay off in instalments is a fixed cost too. List it with its monthly payment.

Example budgets from Budgetberatung Schweiz

Budgetberatung Schweiz publishes example budgets for single people, couples, families, single parents, apprentices and students. You find them on budgetberatung.ch, and its templates let you put in your own figures.

Read the examples as a guide, not a target. The figures are Swiss averages, from federal statistics, comparison portals and the organisation’s own experience. Rent, taxes and health insurance differ greatly by region and canton, and the examples do not count those differences or any premium reduction. As a rule of thumb, housing takes about a quarter of the net income in its examples, and it can reach a third with service charges.

Spreading the bills that come once a year

Some of the largest costs arrive as one bill. Add up a year’s worth, divide by 12, and set that amount aside every month.

• Taxes. The cantonal tax authority assesses your taxes each year, and you normally pay them in instalments (ch.ch).
• Your own share of health costs. You pay the deductible you chose, from CHF 300 to CHF 2’500 for adults, then 10 % of further costs, up to CHF 700 a year (ch.ch). With the lowest deductible, that comes to at most CHF 1’000 a year, before any hospital contribution. Setting aside about CHF 84 a month would cover it.
• Other irregular bills, such as insurance premiums billed once a year, or the Serafe fee for radio and TV. Budgetberatung Schweiz points out that irregular bills like these are often hard to foresee.

Making the budget work

Budgetberatung Schweiz suggests splitting the money into four parts: standing orders and monthly bills, household and personal spending, provisions for irregular bills including taxes, and savings. In practice it suggests three accounts:

• Your salary account receives your income, pays every standing order and monthly bill, and keeps the provisions for irregular bills.
• A second account for daily spending. Move your household and personal budget there and pay everyday costs from it. With only one current account, you can take that amount out in cash at the start of the month.
• A savings account for what is left, if your budget allows it.

If a month is too long to plan, split the household budget into weeks: divide the monthly amount by 4.3, the average number of weeks in a month. Check your spending regularly against the budget, with the organisation’s app or a simple list, and adjust it when it does not fit.

Build a reserve. As a simple rule, Budgetberatung Schweiz suggests saving one to about three months’ pay if you live alone, and three to six months’ pay for a family. On a low income that is often not realistic, it says, but a small reserve still helps: set a small amount aside each month, and start again after you use it.

If the budget does not balance

1. Compare it with what you really spent over the last few months. You see where you overspend, or what you left out.
2. Cut household and personal spending first: going out, hobbies, clothes, food, holidays. It is the quickest place to save.
3. Then look at fixed costs: rent, a car, insurance, subscriptions. Mind the notice periods. A cheaper phone plan or health insurer can save a lot over a year (Budgetberatung Schweiz).
4. Ask for the relief that exists. If you earn little or have several children, your canton may reduce your health insurance premiums. Many cantons inform the people concerned; in others you apply every year (ch.ch). If your taxes are hard to pay, contact your cantonal tax administration: smaller instalments or a later deadline are possible (ch.ch).
5. A single large bill. Contact the sender quickly, before reminders come. An instalment plan is often possible (Budgetberatung Schweiz).
6. If you owe several creditors, you can agree with each how much you will pay and by when. Your budget should allow you to pay the agreed amount within 3 years (ch.ch).

If the budget still does not balance after these steps, get help, from a budget advice service or, if you have debts, a debt advice service. Budgetberatung Schweiz says plainly that needing help in this situation is normal.

Don’t fill the gap with a new loan. From its experience, Caritas debt advice says a credit should only be taken out after careful thought, and never to bridge a financial shortfall.

A budget before you borrow

If you are thinking of a loan, your budget shows whether a monthly payment fits. A lender works it out differently. The Consumer Credit Act aims to avoid over-indebtedness (KKG Art. 22), and its test is strict: you must be able to repay without using the part of your income that can’t be seized in debt collection, with your actual rent, your taxes and your other credits counted, and as if the loan were repaid within 36 months (KKG Art. 28). Caritas debt advice adds that a lender must work with a realistic budget built on your actual spending, health costs and travel to work included.

Our guide how much can I borrow explains that test step by step.

Next step

If bills are already late, call the free hotline 0800 708 708, Monday to Thursday from 10:00 to 13:00, or find the office for your region on schulden.ch or dettes.ch. Otherwise, download a template from Budgetberatung Schweiz and fill it in with your statements of the last three months. If you are weighing a loan, test the monthly payment against your budget in the loan calculator.