Daily life in the UK has changed dramatically in just a few weeks and the way we spend our money is no different. Whilst you may have previously prioritised saving for that gig in a few months’ time, a luxury holiday or even a must-have gadget, right now we’re focussing on paying the bills, online groceries and even finding ways that we can give back to our local community.
If, like many, you’re starting to think that re-working your dusty budget spreadsheet might be a good idea, or if you’re trying to create your own budget for the first time, we’re here to help.
Why do I need a budget?
Put simply, budgets are a great way to help you feel more in control of your finances. If you’re unsure if you can cover your expenses going forward, or want to see where you could potentially save some money, having a budget is definitely the right thing to do.
Creating a budget takes time, but once complete, it can really help you to understand your spending habits and find a savings habit that works for you.
With that in mind, we’ve created some top tips to help you get started…
1. Have a clear idea of what you’re trying to achieve
Wanting to pay off a debt, get a rainy day fund in place or save up for the entire family to have haircuts once this is all over? No matter how big or small your goal is, knowing why you’re starting a budget in the first place will help you to stay motivated and make the changes you need. If your goal changes in the future, don’t be afraid to re-work your budget to accommodate this.
2. Think about your priorities
Having a clear understanding of what is a ‘need’ and what is a ‘want’ is key when creating your budget. Your electricity bill? That’s a need. Family banquet meal from the local Chinese takeaway because you really don’t fancy the food that’s in your fridge? As amazing as we’re sure it would taste, that’s a ‘want’.
As much as your ‘needs’ have to come first, you can absolutely keep space in your budget for the things you want – it’s all about recognising how many ‘wants’ you can afford whilst still staying within your budget.
3. Know where to look
Looking at what you’ve spent in the last few months is a great way to get started on your budget and helps you to get the most up-to-date figures for some of your essential bills, such as council tax or your mortgage/rent payment.
Being at home naturally increases how much we spend on certain bills like food and utilities. You may find that you’re frequenting the fridge more often while you’re spending more time at home (everyone needs a mid-mid morning snack, right?).
4. Every month is different
As hard as this is at the moment, it’s important to try and get an understanding of how your budget might change month on month, especially if you have an expense coming up that may alter how much money is coming in or going out.
For example, do you pay your car tax quarterly, or your TV license annually? Make sure you look back far enough in your bank statements (as well as looking forward) to catch any one-off payments that may affect your finances.
You should also factor in things such as birthdays or special occasions into your budget. £20 to send a gift may not sound like a huge amount, but when you have a few birthdays all in the same month, the costs can soon add up.
5. Budget for extras
We’d all love to be able to plan for every eventuality, but sometimes life throws something at you that you just didn’t expect, like a flat car tyre, a broken washing machine, or a hole in the knee of those trousers you JUST bought for your 6-year-old. Having space in your budget for miscellaneous expenses will help you feel more in control when something unexpected does crop up.
6. Don’t be disheartened if it’s not right first time
Have you just spent 3 hours creating your beautiful, colour coordinated budget spreadsheet, for it to be wrong at the end of the first month? Chances are, your budget won’t be perfect on the first go, especially as things are changing so quickly at the moment. The best thing you can do is see it as a living document, and as your circumstances change, so does your budget. It may take a few months for you to get into the habit of keeping it updated, but stick with it! The more you do it, the easier and more accurate it will get.
7. Don’t forget to treat yourself if you can
Life is for living, so it’s important that you don’t budget so much that there’s nothing left over for you to have some fun. If you plan for a treat, you’ll likely appreciate it more as you know your other expenses are covered. It doesn’t have to be a grand gesture – a small treat can work wonders for your motivation and even your mental health. So, no need to feel guilty about buying that luxury box of chocolates, as long as you’ve factored it in!
8. Comparison isn’t always healthy
We know it’s easy to compare how you manage your money to someone else you know. Our last, but arguably one of our most important tips is that you should try and avoid comparing yourself to others – your budget should always be tailored to you and your financial situation. What works for someone else may not work for you.
Ready to get going?
Creating a budget is no mean feat, but it can be really rewarding. If you’re ready to get started with creating your budget, why not head over to our online budget planner, which you can then print and refer back to.