Simply put, a budget is just a plan for your money. Having a plan for your money doesn’t mean that you can’t have fun. It just means you’re focused on where that money ends up, and that’s a good thing. The budgeting tips on this post will help to make your money go further and remove the surprises that leave us looking for extra cash. If you want to find out how budgeting will boost your money, keep reading.
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Why create a budget?
Budgeting allows us to know where our money is going; in turn, that means we are now wasting less of it. If we identify how much money we need to spend each month on priorities such as bills, we’ll know how much is left for us to play with.
Once we’ve got a plan for our money, we can point it in the direction we want it to go in. Knowing how much is needed for each bill and allocating that money, means we have fewer surprises when that bill is due. For us, our water bill comes every 3 months and it always seemed like a shock.
I guess we use a lot of water…
Because we track our finances, we can estimate how much that bill is going to cost, so we put money aside for it. Now it makes no dent in that month’s wages and we have one less thing to be stressed about. You can do this too and save your self the anxiety of having to pay bills on a credit card.
As the budget forces us to put money aside for each item, it allows us to dictate how much we want to spend on day to day things like coffee.
If we’ve been tracking our spending and see we’ve been wasting too much. We’re in control and make adjustments that end up saving us money and making it go further.
If you haven’t been tracking your spending, download our FREE Finance tracker below. Then follow along with these budgeting tips to create your own.
6 best Budgeting Tips
1. Use a zero budget
This is a budget where all of the money is allocated with zero left-over. To do this effectively, you’ll need your exact income (from all sources) and your exact bills (these shouldn’t change every month), as well as any bills that need to be paid for annually. This is something you’ll need to do at the beginning of every month, as each month may well be different. You’ll then need to look at other expenses like savings / investing / groceries and add these to your budget.
It is really important that if you have a partner, you sit down and do this together. We have a joint account and know how much we need to add each, as well as any other things that might have popped up along the way.
Don’t be worried about not having enough money for surprises, you can create a buffer of around £50 for any additional costs, for example, going over your phone bill, or a new tire.
This budgeting tip will really boost your money as you become much more aware of where your money is going.
2. Save / Invest / Pay off debt
Some of the most important things we allocate immediately are our savings and investments. I know that based on my wage this year, I want to put a minimum of 10% into both of these areas. How much you save and invest would be down to how much your expenses are.
If you have debt, we’d recommend using 20% of your income to pay these off. If this isn’t possible, look at areas to cut your expenses. Check out this fantastic book to teach wealth building principles – removing debt is one of them.
3. Put money aside for annual expenses
Filipa is better at saving than me, having started as a child. Bills would never sneak up on her as she always had her own emergency fund – she just didn’t know it was called that.
For me, annual expenses always seemed to come out of the blue, even though I knew they’d come eventually! I’d then be expected to have enough money for car insurance, road tax, MOT and service for both cars a month apart!
I’d have two broke months of car payments, that fall around Christmas! Something had to give.
This budgeting tip has made times like these, stress-free and have allowed me to boost my money over time!
I used to pay bills like car insurance monthly. Hell, I even bought my first car on finance! Filipa changed my ways and I am so grateful. It turns out that I didn’t read the fine print!
You pay extra for the privilege of paying monthly! It may well only be around £30, but that’s better in your pocket than someone else’s! It doesn’t seem like much, but that’ll buy you around 13 lattes from Starbucks or extra money for you to invest! I’d hold on to it, thanks!
‘What does it take to keep this money’ you ask?
A little discipline. Discipline to put aside a small amount of money every month to pay for these things when the time arrives!
We put money aside in a separate account. When that money is due, we send it from one account to the other. I then exhale a sigh of relief that I’m not broke. I can see the pride in Filipa’s eyes as I tell you this! I hope you can see the pride in mine when you do it yourself.
4. Track your spending, either with an app or our finance tracker
Keep all your receipts! This budgeting tip will help you stay accountable each week.
Do this together with your partner, hell make a date out of it!
Some people find this laborious. We throw on a chilled playlist and tackle our finances with a glass of wine. Does anything say romance more?
If you haven’t downloaded our FREE Finance bundle, do so now! We also have some other goodies you might like – budget print out to teach your kids the importance of budgeting and the spreadsheet we use for budgeting ourselves.
5. Pay for some things with cash
This budgeting tip has saved us a ton!
There are some areas that are really easy to go over budget on. For us, that was our grocery shop – we like to eat! One of the best things you can do to tackle this is to take out how much money you have put aside for your weekly shop. Keep an eye on how much you’re spending using a calculator and don’t go over this. This method also really shows you how a pound here and there will eventually decimate your budget!
This method is also really good for your social budget. If you can see that money dwindling, you know it’s time to cut back.
I don’t know what it is about paying for things with cash, but it feels very different to paying for things with plastic. For me, it’s like it sets off pain receptors in my brain. I hate handing over that hard-earned cash!
6. Don't be afraid to trim the fat
One of the best budgeting tips we can give is to trim the fat. We tend to want a bunch of things; the reality is that we need very little.
If you’re creating your budget and see that your money doesn’t stretch, it’s time to trim that fat! Look at that budget and see the things that are holding you back. For us, we don’t go below our 20% for saving and investing – so it couldn’t come from there!
Perhaps you smoke a pack of cigarettes a day, that’s around £70 a week! That’s one expensive habit! If you can’t quit (which would be my recommendation), try cutting down and making that one packet last for 2 days or more. Now it’s a £35 a week habit, which is better but not perfect.
You may want to look at your direct debits and see which ones can be removed. Why not consider removing your cable Tv (Sky / Virgin) and just use Freeview / Netflix / Amazon? This would be a fantastic saving. You will get a similar service for a fraction of the yearly cost! If you don’t need to trim the fat, this is still a fantastic way to boost your money – why not invest the extra?
There are many fantastic ways that allow us to make our money go further. These budgeting tips have boosted our money and made it go further than before.
They are easy to follow and implement into our daily lives! However, if you are not used to budgeting – don’t be too discouraged if you don’t succeed 100%. Just continue making the effort and eventually, you’ll get there.
Sometimes things just don’t go to plan and you need to adjust your budget! One month I got two parking tickets! One made me go over my buffer and two just seemed to ruin everything. That month I decreased the amount I went out to eat and made other smaller cutbacks. I was still a little short – so I took some money from my emergency fund. Which was promptly topped up the next month. Just make sure you budget for that extra next month.
At the end of the day, you are the boss of your money – make sure you tell it what to it and where to go.
For more interesting posts about saving and making your money go further, make sure you stay posted, we release new content every week!
For more fantastic information about tracking your spending, why not check ‘The Wealth Tribe‘.
Please comment and add your own budgeting tips! Also, share this post with friends and families to help them on their way to frugal living.
I look forward to talking to you again soon!