What is a Personal Survival Budget?

If you’re looking to start your own business, you might have considered applying for a Start Up Loan as a way of financing your new venture.

Offering personal loans for business purposes from £500 to £25,000 at a 6% interest rate, a Start Up Loan offers a repayment period of between one to five years, making it a good possible option for entrepreneurs.

When you apply for a start up loan, the Start Up Loans team will ask you to complete three documents:

• a Business Plan
• a Cash Flow Forecast
• and a Personal Survival Budget.

In this article we’ll explain what the last of those documents is, the Personal Survival Budget.

We’ll take you through how to write one, what to include, and what the Start Up Loans team uses it for when assessing a loan application.

What is a Personal Survival Budget?

Also known as a Personal Income and Expenditure Form, a Personal Survival Budget (PSB) is a comprehensive overview of your ongoing monthly finances, detailing both essential and discretionary expenditures. 

In other words, your PSB is a snapshot of your finances, showing your income and expenditure.

It's like a monthly diary of what you earn and spend, covering everything you need to keep track of.

Like any diary, it’s important that your PSB matches your bank account statements, showing a true and accurate reflection of your finances.

If you have more than one bank account, you’ll need to make sure your PSB gives you the full story by showing all the money that comes in and goes out, across every account.

Most businesses don’t make enough money for their owners to draw an income during their first few months of trading, so the PSB is vital because it helps illustrate what life might be like financially once you’ve opened your business.

By understanding how much money you need to live on now, you can accurately budget for how much income you’ll need moving forward, especially if your business isn’t profitable right away. 

It’ll also help you make decisions on whether you’ll need additional financial support to get your business going.

What information is in a Personal Survival Budget?

Your Personal Survival Budget is about your personal finances, this means it should only show your personal income and expenditure. 

Make sure that any money from your partner, family, friends, or anything that'll pause when you leap into starting a new business isn’t included.

It’s common amongst applicants to forget to include bits of information that can really help their case, such as child benefit payments or tax credits. 

Including these details adds to a more accurate and comprehensive picture of your financial situation, enhancing the evaluation of your financial health.

Remember, it’s very important to be honest and as thorough as possible when completing your PSB.

If you’re applying for a Start Up Loan, it can feel like minimising your outgoings could make your application stronger but in the long run it won’t help the success of your business.

What expenses should go into a Personal Survival Budget?

When filling in a Personal Survival Budget make sure you include the following expenses if you have them:

Living costs

The first step is to take a closer look at your living expenses. 

If you look at your bank statements from the past three to six months, and you can figure out an average of what you've been spending. 

This includes all the essentials like your mortgage or rent, groceries, fun outings, clothes shopping, travel expenses, filling up the car, and even those pharmacy visits.

Family costs

If you have a family, you’ll need to include all of their expenses too, including childcare costs, clothes, and even school uniforms.

Monthly bills

Next, scan through your bank statements and make a note of all of your monthly bills such as a mobile phone contract, broadband, or even monthly payments on a kitchen appliance. 

They should all be totted up and added into the PSB.

Debt

Another thing to include is any outstanding credit card debt, car finance or other loan repayments you need to make on an ongoing basis.

Savings

Lastly, be sure to include any savings you might have.

What income should be included in a Personal Survival Budget?

As the Personal survival budget is about your personal finances, you don’t need to include any income generated from your start-up.

A general rule of thumb is to only include income that is ongoing and will continue once you’ve started your business. 

One off payments or income from a job you’re going to quit need not be included.

Instead, make sure you include:

• your salary from your current job if you intend to keep it once you’ve started your own business
• any benefits you currently receive such as Universal Credit or tax credits – but be advised that once you start your own business your eligibility for those benefits might change
• any personal or state pension you might be drawing from
• any personal savings you might have but, remember to think carefully about how much of your savings you can live on and how much you need to keep back for other purposes
• any other incomes like share dividends or income from any properties you rent out.

Calculating your Personal Survival Budget

Once you’ve added up all of your monthly income and expenses you can calculate how much money you’ll be left with at the end of each month using the following formula:

Income – Expenses = Remaining funds or a Deficit

If you have a deficit, it means that your expenses are greater than the amount of income you have coming in. 

As a result, you’ll need to work out how you can either bring your monthly expenses down (by cutting back on a few things for example) or how you’ll boost your income.

If the result of your calculation leaves you with money left over every month, you could choose to move more of your income into savings or invest more into your business.

How is a Personal Survival Budget different to a Cash Flow Forecast?

The principal difference between a Personal Survival Budget and a Cash Flow Forecast is the information they contain.

A Cash Flow Forecast will contain information concerning the finances of your business whilst a PSB focuses on your personal finances. 

Your Cash Flow Forecast is like a financial roadmap for your business, predicting the cash you anticipate flowing in and out over a certain period – if you’re applying for a Start Up Loan, that period is 12 months. 

Think of it as tallying up all the money you expect to earn from different places—such as sales or payments from customers—and then sizing it up against the expenses you'll have, including paying suppliers, covering the rent for your shop, office, or workspace, and paying taxes. 

A Cash flow forecast will also help you develop an idea of the amount of salary you could draw from your business, or how many sales you’ll need to make each month to cover your living expenses.

Understanding this will help you evaluate how viable your start-up is, especially in terms of covering expenses and any loan repayments you're considering. 

It’s all about making sure your business can sustain itself and support you too.

As part of a Start Up Loan application, applicants are asked to provide both documents alongside a Business Plan.

If you’re using the Business Plan template on the Start Up Loans website, the minimum amount you need to cover your living expenses from your PSB will be applied automatically to your Cash Flow Forecast.

How does Start Up Loans use your Personal Survival Budget?

The Personal Survival Budget is one of the documents that Start Up Loans will ask applicants to submit with their application in order for them to make a lending decision.

Start Up Loans will then consider the PSB alongside an applicant’s Business Plan and Cash Flow Forecast when coming to a decision on whether to offer a loan. 

Remember that the faster an applicant can provide the documents required, the faster their application will be a processed and a loan decision made.

What support is available to help me complete my Personal Survival Budget?

If you’re applying for a Start Up Loan and are struggling to complete your Personal Survival Budget and need some assistance, you can contact your dedicated business advisor and finalise your application. 

They provide support by phone or email and may ask for other documents to strengthen your application. 

They will then review and submit your application for a decision.

Where can I download a Personal Survival Budget template?

You can download a Personal Survival Budget template from the Business Guidance section of the Start Up Loans website. 

If you’re applying for a Start Up Loan, you can also watch a video tutorial on how to complete your PSB once you have begun the application process.