Building number confidence: Budgeting
5. Planning your budget
Knowing exactly how much money you have coming in, and how much you have going out, will help you to achieve, your financial goals.
- Decide what you want to achieve, and build this into your plan. For example, if you are saving for a holiday, or major purchase, work out how much you will need to set aside each month and list this under your outgoings. You might also consider setting up a standing order to move this amount into a savings account each month.
- Aim to put a regular amount aside, however small, to create a buffer which will help to cover unexpected costs.
- Monitor your budget regularly, at least monthly. This will help you to adjust your plan in good time, for example you may find that a direct debit has increased.
- Monitor your personal spending to ensure you do not exceed the amount put aside for this in your budget plan.
Setting clear, realistic goals, and monitoring progress, will help you to stick to your budget.
Calculating savings goals
You can calculate savings goals using common operations, like multiplication and division. Click headings below to expand.
Subtract the total of all your expenses from your total income.
For example, if your net pay is £1500 and your total expenses are £1000:
£1500 - £1000 = £500
You have a surplus of £500 which you could deposit into savings.
Multiply the amount you plan to save each month by the number of months.
For example, if you save £60 per month for 6 months:
£60 × 6 = £360
In 6 months you will have saved a total of £360.
Divide the total amount you want to save by the number of months.
For example, if you want to save £1000 in 5 months:
£1000 ÷ 5 = £200
You need to save £200 each month, for 5 months, to reach your goal of £1000.
Safe savings options
The safest place to save money and earn a predictable amount of interest is a regulated bank or building society savings account protected by the Financial Services Compensation Scheme (FSCS). There are other options, but they can be risky. For example, the value of Stocks and Shares can rise or fall, and you may get back less than you invested. Cryptocurrencies are also highly volatile and not regulated in the same way as traditional financial products.
It's a good idea to get independent financial advice before investing, especially if you're unsure about the risks or which options suit your needs.
Using a cashbook
A Cashbook is a record of your spending over a specific period which allows you to check that you are within budget and how much cash you have available at any given time.
Mairi's budget allows £370 a month for weekly shopping and miscellaneous spending, and using a spreadsheet app, she has kept a note of everything she has spent this month.
| Date | Description | Cost (£) | Balance (£) |
|---|---|---|---|
| 01.06.25 | Allowance | 370.00 | |
| 04.06.25 | Weekly shop | 48.00 | 322.00 |
| 05.06.25 | New jeans | 39.00 | 283.00 |
| 11.06.25 | Weekly shop | 46.00 | 237.00 |
| 12.06.25 | Train travel | 21.60 | 215.40 |
| 18.06.25 | Weekly shop | 52.00 | 163.40 |
| 18.06.25 | Cash | 20.00 | 143.40 |
| 19.06.25 | Lunch out | 17.50 | 125.90 |
| 20.06.25 | Cinema trip | 16.00 | 109.90 |
| 24.06.25 | New bag | 28.50 | 81.40 |
| 25.06.25 | Weekly shop | 53.00 | 28.40 |
On 25 June, Mairi is still within budget with £28.40 remaining of the allowance she has set aside for shopping and incidental spending this month. If she left this in her account, she would still be in credit (just) - see the activity in the previous page.
Banking advice and apps
Your bank will provide budgeting advice and will likely provide an app to help you achieve your goals.
Banking apps will often allow you to put money into separate 'pots', and set up spending targets. Notifications can be sent to your phone to alert you to pending payments or when your card is used.
Other budgeting apps can help you manage your budget and savings across different bank accounts.
Getting help
If you find you are struggling to make ends meet, or with debt, Citizens Advice, StepChange and National Debtline provide free advice and support.