Budgeting Help for Beginners: Any Tips?

jacksonreed003

Hey folks, I'm just starting out on my budgeting journey and feeling a bit overwhelmed, could anyone share some beginner friendly advice or recommend easy to use tools to help me set up a budget and actually stick to it, thanks advance.

blue.peter

MSE offers a bit of help here. This includes a budgeting spreadsheet that you can download and complete.

Remember, though, that setting a budget is only half the story. The big issue is that you must then have the willpower to stick to it. sometimes, this'll mean stopping yourself from buying something that you'd like. You have to be able to distinguish between needs (a roof over your head, food) and wants (an expensive visit to a coffee shop).

The best thing I ever did was to start to keep track of my spending on bank accounts, credit cards etc. Initially (about 40 years or so ago), I used pen and paper. These days, I use AceMoney. Other similar programs are available, e.g. MoneyManager Ex. The thing to do there is to treat any known bills (energy, council tax, mortgage and so on) as paid as soon as you receive your salary. That way, you won't spend the money on something else.

blue.peter

These threads might give you a bit of food for thought (don't be put off, thinking that the headings don't apply to you: they still contain some good general advice):

Help budgeting & spreadsheet templates

Shocked at my spending

How to get back on my feet with my finances

sausage_time

Some great advice here.  Before setting out a budget, I'd recommend tracking all spending and expenditure for a complete pay and bill cycle - ie a month,  That in itself may expose areas you can tighten up on, and in any case you can use as a baseline going forward.  

kimwp

sausage_time said:

Some great advice here.  Before setting out a budget, I'd recommend tracking all spending and expenditure for a complete pay and bill cycle - ie a month,  That in itself may expose areas you can tighten up on, and in any case you can use as a baseline going forward.  

I second this advice. And add that you'll need to regularly track or review your spend to see if you are on budget.

It will take a few iterations to get a budget that works for you - it has to be one you can realistically stick to. If you can't bring an area of spend down, you might need to increase the budget there and  look at reducing another area.

In terms of sticking to it, the best way imho is to have money pots - electronic, physical, whatever for each area of spend and then you can see the money going down and how much you have left for that period. 

So you might have a pot for eating out - each time you eat out, you reduce the pot. If there's not enough left in the pot, you either don't spend more in that area or move some money for another pot. (But obviously not a pot for essentials, bills etc)

Rob5342

Monzo's and Starling's apps can be very good for the day to day tracking of your budget as they let you split your money into pots and spaces so you can easily keep it aside for different things. When I get paid I put all the money for my bills into my bills pot and the direct debts for those are set to come straight out of the pot. I split what's left into a pot for each week and empty one of those pots into my main balance each week. It works very well as I can largely forget about the bills and just have to think about making the current week's pot last.

I also find it helpful to treat my savings like a bill and have a standing order to pay into them as soon as I get paid.

Make sure you review your budget regularly. I have a spreadsheet that calculates everything so all I need to decide on is my weekly pot amount and how much I'll be saving.

One last thing I'd say is look after the pennies. £2.74 a day on a sandwich or a coffee doesn't sound like much, but over a year it's the difference between having £500 in a savings account and £500 on a credit card.

Jami74

Divide your annual bills by 12 and put that amount of money aside each month. I started in March a few years ago putting £50 a month into a separate savings account, getting to December and having £500 set aside for Christmas was the best feeling ever after what had otherwise been a tough year financially.

Organgrinder

I've kept a very basic spreadsheet for years which has "pots" for my expenditure. These "pots" include fixed spends eg mortgage, council tax, savings, pension etc, estimated spends eg food, fuel, and discretionary spends, eg going out, holidays. For discretionary I estimate a maximum for each month.

I track my expenditure and assume all pots are used each month. 

I record my expected balance and my actual balance.  If I'm in surplus I may treat myself. Eg, this month we've had an unplanned meal out and overnight stay. We did the same in December. Rewards like this help me stay on track.

Any unexpected income eg bank switching incentives clearly mean I'll have a surplus so every so often i'll reset my expected balances. Sometimes with unexpected increases (eg our council tax rise this year is double that expected), I'll have to accept that my expected balance may be lower and I'll reset again.

It has of course been known for me to fail to hit my target for other reasons eg overspending. If so, I'll try and reign in the discretionary spend.

It works for me and currently my 4 year estimate (yes I do plan in advance) is some £13,000 above where it was 12 months ago, mostly as a result of lower fuel costs from changing jobs which account for £6,000 of that, but also through reducing my target food spends and changing my shopping habits to cut down the number of times I went to the shops. I used to go every day. Now I go once a week.

Hope that is of some help.

williewonder

I get £500 personal allowance 4/weekly from my deputy. I try and save £350 4/weekly in my savings and have £150 for food so £37.50 a week for food shopping. It's just willpower to stick to that but I can manage apart from the binges with beer that can last 3 days where the money I saved is wasted. Thats what I need to control.