Budget Living

Budgeting Basics: 3 Steps To Building A Budget That Works For You

Whatever your goals in life, there’s a good chance you’ll need money set aside to fund your plans. But, in a climate where 9.61 million UK households have no savings at all, and those who are managing to save put away an average of just 3.8% of their take-home pay, it’s not always easy to stretch your income to achieve your goals. A good place to start trying, though, is by building, and sticking to, a budget.

Budgeting doesn’t have to be a huge burden that restricts your life. The main role of a budget is simply to give you a better view of where your money is going. How you use it once you have it is up to you. Perhaps your aim is to rethink the way you spend your money to make sure you can afford a priority expense. Or, perhaps you’re looking for places you can cut back on your spending to free up cash for a bigger life goal.

So, how can you create a simple budget that you can stick to?

Find a tool that works for you

Budgets aren’t all pen and paper affairs these days. You could try setting up your budget in a spreadsheet, or there are even apps and tools out there that you can sign up to to take some of the leg work out of it. Money Dashboard is one of our favourites. It’s free to sign up and use, and works by linking up to your bank and credit card accounts directly (with your permission, of course) to scan and categorise your transactions. It then shows your expenditure in colourful, easy to understand graphs. Setting up a detailed budget doesn’t get much simpler!

Make sure you include as much detail as you can

A budget works best when you include as much information as you can. Ranging from your big, regular expenses such as your rent or mortgage and your bills, to smaller or occasional purchases like a special treat. The more of your spending you capture, the clearer the picture of your spending habits you’ll have at the end of it. That way, it’ll be easier to see if and where you can adjust your spending to free up some cash.

Set yourself goals

Setting yourself spending goals that you track and try to stick to is one of the easiest ways to free up some of your money. Your goal may be redistributing your money to make sure a particular expense is covered. You could be aiming to set some money aside to go towards a longer term plan. Having a goal and achieving will help you towards making sure your plans become a reality.

The most important thing with a budget, as with many things, is that it works for you. To be useful, it needs to slot into your life easily and effortlessly. If you try something that you keep forgetting about or that is a lot of work to maintain, try something else!

Getting a better view of exactly where your money is going empowers you to make changes to achieve your goals, with your money and your life. If you’re stuck for ideas on how to go about it, check out our Budget Living and Money Savvy articles for ways you can cut costs every day and squeeze your money harder.

What are your budget tips? Leave your comments below!