How To Create A Budget Plan

Sometimes when you dare to check your bank account right before payday hits, and you see a sad looking £31.57 sat in there to last for the week, you can get to wondering- how can I end this cycle?! The one change I made around two years ago that enabled me to start saving 27% of my salary (whilst living in London!) every month, was learning how to create a budget plan.

Everyone will have a different budget plan to suit their needs, and it’s important to engage with your numbers, decide what budgeting method you will use and your financial goals that you are working towards.

How To Create A Budget Plan

Creating a budget plan isn’t about depriving yourself of the things you love- it’s about spending less on the things you don’t love, and more on the things that you do love. For example, you might set out to spend less on groceries and clothing, so that you can spend more on travelling.

Before you get started, think about your financial goals, and the areas of everyday spending which you would like to cut back on to achieve those goals. Check out these frugal living tips to help save you more money on day to day costs.

Track Your Expenses

To create your own budget plan, the first thing you should do, is write down all of your fixed monthly outgoings and direct debits. These are things that you pay every single month that is not included in your day-to-day spending. For example, rent, bills, memberships and subscriptions

I would strongly encourage you to write down your monthly expenditures as a starting point, especially if you are trying to cut back as this will show up any unnecessary subscriptions that you could cut out and save money on.

Next, you can start to track your everyday expenses- do this for at least a week (or even a month) so that you have the true picture of how much you are spending each month. To do this, you could use an app like Monzo which will automatically categorise your spending for you.

Before you start using a budget- it’s easy to estimate that you spend £100 a week on groceries. BUT when you track every single grocery shop purchase over the course of a week or a month, you might start to see that you are actually spending an amount that is completely different to your estimation.

Which Budgeting Method Should I Use?

After writing down all of your outgoings you can start to think about how to tackle managing your budget. There are so many ways to create a budget plan, and since everyone’s approach to money is different. A budget plan that works for one person, might not be as effective for another.

It’s important to find the right budgeting style for you. I’m going to talk you through a few different plans that you could try so that you can start seeing progress towards your goals.

You might also enjoy: Zero Based Budgeting- How Can It Help You?

Notepad Budgeting

Notepad budgeting can work because of its simplicity- it relies on a notepad, pens and a calculator. This method involves saving your receipts and noting down your spending at the end of every day. This means you can measure your spending and know exactly what you end up overspending on.

By writing down what you spend each day, you can see if you are getting close to busting your weekly budget and can cut down on your expenditure. You could bring this into the 21st century by keeping track of your receipts on an Excel document, and this would allow you to easily make calculations and comparisons from one week to the next.

Step that Excel budgeting sheet up by using it in tandem with Google Sheets- that means that you can access your budget from your phone AND your laptop meaning that you never have an excuse not to update it.

If you’re looking for the perfect budgeting spreadsheet, head to the Thrifty Londoner shop to buy yours for just £2.99. It also comes with a user guide, so even if you’ve never used Excel before, you will be able to create a budget plan using this template.

You might also enjoy: What Is the 50 30 20 Rule Of Budgeting?

Money Saving Apps

There are so many amazing money apps out there that have been designed to help you stick to your budget and stop overspending- we millennials spend so much time on our smartphones that we may as well use them to help us keep track of our money too!

Monzo is a brilliant tool which automatically categorises your transactions. You can see at a glance where you are overspending and where you can cut back. You can set your budget and the app will track all of your transactions against your budget.

If you also fancy making a little money on the side whilst keeping track of your receipts, you can use apps like Shoppix who credit you with tokens for uploading photos of your receipts. Once you have saved up enough tokens, you can exchange these for Amazon or iTunes vouchers, or even redeem them in cash via PayPal. If you fancy getting a 200 token starting bonus, you can use my Shoppix referral code which is: DGAOXURP

You might also enjoy: The Best Money Saving Apps For Millennials

Cash Envelopes

Some people find that they often spend less money when they use cash because a transaction feels a lot more ‘real’ when parting with hard earned notes.

It is also a very visible way of seeing what money you have left for the week. There are benefits of using a cash budgeting system, but on the flip side, you may still spend on cards out of necessity. For example, contactless payments for tube fares. This means that some transactions can easily slip under the radar.

Using cash envelopes is a popular way to split up your expenditure into categories. So maybe you would put £30 in a ‘groceries’ envelope and £30 in an ‘entertainment’ envelope so that you know that once you have spent what is in each envelope, that’s it for the week!

It is best to plan your weekly envelopes at least a month ahead so that you can also factor in envelopes for birthday presents or train journeys that you will have to pay out for that month.

You might also enjoy: How To Live On A Budget In London

Budgeting can have a crazy impact on your financial life. It can make the impossible, seem possible. If you’re trying to pay off debt or perhaps save towards a house deposit, knowing your numbers will help make those dreams a reality.

A budget shows you the true picture of how much you are spending, and where you can cut back. It also helps to identify trigger points for spending. A popular example might be spending out of convenience. For example, you might find that you spend on a takeaway when you get home late from work and don’t have any food in. Or perhaps you book a train ticket on the day instead of 3 months in advance.

Preparing for expenses and knowing your numbers will enable you to make progress towards those all important goals. Try it, you won’t regret it.


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  1. Pingback: My budgeting strategy – Pretty Penny

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