In this guide
Budget planners are hard to draw up, and even harder to stick to. That’s because life has a habit of throwing up unexpected challenges that don’t fit into a spreadsheet column or banking app.
Nearly half of UK adults don’t feel confident making money decisions, according to the government’s financial guidance website, the Money and Pensions Service. Only a third feel in control when planning ahead financially
To make matters worse, inflation is slowly chipping away at our finances, making it easier to lose track of where our money is going.
To help, we’ve launched a handy new budget-planner tool. Simply enter your incomings and outgoings and we’ll break down where you can cut back and start saving towards milestone events such as buying a home, weddings or retirement.
Read more: How to create a family budget
What information do you need?
Before you start, gather together information such as your salary and any other income – basically, all the money that is coming into your bank account.
Then work through your expenses, selecting how frequently you need to pay them. Cover the main, regular ones, such as your mortgage payments or rent. Then, more occasional outgoings like birthday presents or holidays. Going through your bank statement line by line can be really helpful.
Don’t worry if you forget something; even if you close or refresh the page, the information will be saved in your browser for 24 hours.
Once you have your statement to hand, enter them into the budget planner online.
You can also download and print off your personalised plan to help get the family involved too.
Read more: How to invest to beat inflation
Our top budget-planner tips:
- Be as accurate as you can. Being £10 out here or there could add up to a significant amount of money across all your incomings and outgoings, and risk leaving you short across the full year – so don’t be tempted to “guesstimate”.
- Think beyond just one month. Taking a longer view will help ensure that you don’t miss the big, occasional payments and that you maintain a more accurate picture of your true spending.
- Build in a small savings buffer, just in case your spending goes over your targets, so you aren’t left running short. Also try to build an emergency pot for bigger surprise expenses. Temperamental boiler – we’re looking at you!
- If you have tracked everything in your budget planner and your outgoings outweigh your incomings – but you can’t work out where to make cuts – speak to a free debt charity such as StepChange or Citizens Advice.
Types of budget
Once you have your incomings and outgoings tracked in the budget planner, there are lots of different ways to organise your budget depending on your goals and what works best for you. Here are a some budgeting methods get you started.
Type of budget | How it works |
|---|---|
| 60% solution | Keep your essential expenses – for example, your mortgage or rent, household bills and food shopping – to about 60% of your income. The remaining 40% is split between retirement planning, other savings and spending pocket money. |
| Zero-sum budgeting | Every pound of your spending is added up, including savings contributions and debt repayments, and then subtracted from your income. The amount should come to zero. |
| Reverse budgeting | This method flips the focus so you build your budget around your savings goals. Each month, set aside the amount that you want to save, then adjust your spending based on what remains. |
| The 50/30/20 rule | Split your outgoings between essential spending (50%), personal spending (30%) and savings goals (20%), to help build up pots for future goals. |
To get started with our budget planner, click here.
Important information
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