If you’re constantly worrying if you’re going to reach the end of the month without running out of money then you most likely don’t have an income problem, but a budget problem.

The easiest way is to control and understand your incomings and outgoings. If you suddenly begin to make more money then you’ll probably still have these issues as you won’t understand how to manage your money.

Using a simple budget template doesn’t need to be time-consuming and once you set it up it’s like clockwork each month especially if you tend to spend similar amounts on similar things every month.

Collate your Financial Paperwork

Before you begin to build a budget you first need to understand your current financial situation. In past decades this would include trawling through sheet after sheet of financial statements, but now you can just simply log in to your online accounts.

You need to access any information that relates to your income and expenses including your:

  • Current accounts
  • Credit card accounts
  • Mortgage statements
  • Loan statements i.e car.
  • Investment accounts
  • Any other debts

Calculate your Full Income

Now that you have all your paperwork together you now need to calculate how much income that you generate each month. This means the total amount of money that you have coming in each month. For most people, this will just be the total amount that your 9-5 pays you each month. However, if you have any other side jobs or hustles then you need to take into account this money.

Additionally, if you have any investment or savings accounts then you need to factor in any dividends or gains that you make each month.

Once you have a final figure for your total income then you have a clear picture of how much your budget needs to work within each month. Now you can move on to the next stage of creating your budget.

Collate your Monthly Expenses

You now need to calculate the total monthly expenses that you’re responsible for each month. This means every single bill which will vary from person to person but below are some examples of the types of bills that most people need to pay each month.

  • Rent/mortgage bill
  • Electric bill
  • Council Tax
  • Water bill
  • Subscriptions (i.e Streaming, Amazon Prime etc)
  • Gym/Fitness
  • Phone bill
  • Internet bill
  • Loan repayments
  • Car loan repayments
  • Car fuel
  • Insurance payments
  • Food
  • Health and beauty expenses
  • Medical/prescription expenses

Determine Essentials and Non-essentials

Now you have all your expenses laid out, this is where you need to start making cuts in various which will depend on your overall savings goal. Of course, it’s difficult to make cuts to fixed costs such as rent or council tax.

Essentials are things that you need as a bare minimum to survive such as your mortgage whereas your non-essentials will be things such as Netflix or takeaways. For this task, it’s important to have a goal for what you’re trying to achieve with your budget then you can be much more ruthless with the expenses that you keep or remove.

You need to get to a point where your income and expenses are equal. Even if you’re saving and investing this will go into your expenses column so every penny of your income needs to be accounted for.

Goal Setting

Making a budget without a goal in mind will make it more difficult to stay on track once you’ve created your budget. Your goal could be anything from ensuring you don’t overspend to ensuring that you save £500 each month.

Most people, know exactly what they want to save for the long term. If you don’t then it’s time to have a hard think. If you’re not saving for anything specific then your goal can be something slightly vaguer such as save a certain percentage of your income each month.

Once you have your goal you can then re-work your budget around this goal which makes it easier to choose which expenses to retain or remove.

Use a High-Quality Budget Tracker

There are hundreds of different types of trackers available for free around the internet however you need to ensure that it’s fit for your purpose. Ideally, it should be able to ingest all of the types of data and expenses that you need. It also needs to be simple to use and not have dozens of tabs that can take a considerable amount of time to populate each month.

For this reason, we’ve created a simple budget tracker that also maps against your savings goal so you can see how you’re progressing towards your target each month to provide you with extra motivation to stay on track.

Automate Saving and Investing

A great benefit of having a budget is that it’ll show you what potential surplus income that you can use to invest and build for your future life. It’s a reality that we’re having to retire later and later in life and your current pension fund may not be enough to last.

You must begin to save or invest a minimum of 10% of your monthly income. This allows your money to grow over time and with a budget tracker you can easily re-allocate this as a lump sum each month.

Ideally, you should automate any savings or investments each month so it works in the background. This prevents you from making any changes or forgetting to do it each month. There is a range of different things that you can invest or save into including a LISA, ISA or Index funds.

Put the Plan into Action

A common mistake that happens is people spend time putting together the perfect budget plan and then never refer to it or update it. This is a complete waste of time so you need to ensure that you keep updating it each month to see where you are financially.

It’s easy to slip out of the habit so be sure to set a reminder in the first week of the new month to update at a minimum. Once you get into the swing of things it should take less than an hour of your time and once you begin to move towards your goal you’ll look forward to updating it.

Ideally, you should be recording your expenses as you move through the month which will stop you from overspending. You can also then plan for any larger expenses or if you hit your spending max for a particular category you can then proactively either stop spending or reallocate money from a different category to cover the costs.

Make Adjustments

Once you have your budget in place this isn’t going to be permanently the same each month and is an ongoing process. Life changes as time go on which will change your budget. Some of these changes can be positive such as a new better-paid job or a promotion whereas others can be negative such as an unexpected bill or job loss. However, in both instances, you need to reflect these changes within your budget.

Once you know of these changes you need to change your budget as soon as you can so you can stay on track with your expenses. Ideally, if you do increase your income then you should allocate this excess into money generating areas of your budget such as investing or savings rather than upgrading your home or clothes.

You need to control your budget and not let your budget control you.

Utilise Budget Banking Features

With the numerous choices of online banking apps such as Monzo, they now offer features that make it easier to manage your money each month. Whenever you buy something using the card it automatically categorises the payment i.e transport or eating out.

You can also track your spending between each payday by setting your payday within the app. Inside the app, you can also set max monthly spend limits by category which you can match to your monthly budget. This makes managing day to day spend much easier and you can monitor as you progress through the month.


Budgeting doesn’t need to be time consuming or difficult but the benefits are huge including reducing the amount of stress you have about your money allowing you to grow your future.

Budgeting isn’t about restricting yourself to the maximum but about taking full control of your money instead of passively moving through each month. Budgeting shouldn’t feel like you’re being punished because it’s still all your money so you can allocate spend to fun experiences.

Categories: Saving Money


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