How to Budget Your Money

Setting up a savings account is one thing, but regularly paying into it is another. Getting into the habit of saving money is not easy, and even though you may start the month with the best of intentions, come the end of it there may be very little to put away.

So, how can you avoid overspending and ensure you have a healthy sum to put away regularly? Budget!

Tracking your finances closely is the best way to control your expenditure and make necessary tweaks to your spending habits. We’re going to look at ways you can monitor your finance and cut down effectively.

What Do You Need to Spend?

Before you work out how much you can save, you need to calculate how much money needs to go out. This includes mortgage payments, rent, bills, tax and insurance payments. Once you reach a set figure that is going to come out of your account monthly, you need to deduct this from your monthly income. The amount you are left with is what you have left to budget with.

Keep a Diary

To work out the fluctuating costs such as food, clothes, leisure spend and occasional spending (holidays, birthdays etc.) you need to keep a diary. Note down everything you spend in the day and total it up at the end of the month. This is key to finding out where you can save money.

Cut Back

You’re spending how much per month on coffee!? It’s the little things that add up over the course of a month. Once you can see how much you’re spending unnecessarily, you can make changes. This is where the budgeting part comes in. You don’t have to cut little indulgences out completely, but setting yourself a monthly budget keeps your spending controlled.

You may even be able to cut down on necessary spending. Switching to different utilities providers can save you money in the long term, and while it may not seem you are saving a great deal per month, over the course of a year it could make a big difference.


Put your budgeting plan into action by setting yourself a spending target and allocating funds to certain areas. If you aim to spend a set amount on food for the month, try to stay within your limit. This can be achieved by buying cheaper brands or cutting out luxury items if needs be. You don’t have to live on a shoestring to save though! You just need to be a little savvier, and know exactly where your money is going.

Little and Often

Putting away small amounts every month and sticking to your targets is a much more efficient way of saving than trying to put away large lump sums. It might be wise to work out a comfortable amount to save per month and set up a standing order to take that figure out after your wages are paid in.

Budget Calculators

Using a budget calculator can help you monitor your spending and prompt you to think about things you might be spending money on that you otherwise might not have! There is a great budget calculator on the This is Money website which splits your monthly outgoings into categories. There are also lots of great mobile and tablet apps which can help you to track spending while out and about (they can also take the place of keeping a written diary). And, in the interest of saving, many of them are free to download! Here is a list of the top 7 budgeting apps in 2015.