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How to do a budget

Easy steps to plan and manage how you spend your money

Page reading time: 2 minutes

Having a budget helps you to feel in control of your money. You can put aside money for big bills when they arrive, and plan savings to achieve your money goals.

You don’t need an accountant or special software to set up your own budget. Start by looking at where you are right now and where you want to be.

Set your money goals


Ask yourself: what is my goal? It could be to stay on top of bills, save for emergencies, pay for your children's education, or save for a holiday or a house deposit.

See where your money goes


To do this, track your spending over a week, a fortnight or a month. See track your spending for practical ways to do this.

How to set up your budget


Then follow these steps to set up each section.

1. Record your income

Record how much money is coming in and when. If you don't have a regular amount of income, work out an average amount.

Make a list of all money coming in, including:

This money could be from your wages, pension, government benefit or payment, or income from investments.

2. Add up your expenses

Record your regular expenses, including:

Regular expenses are your 'needs' — the essential items you need to pay for to live. These include:

Fixed expenses, for example:

Debt expenses, for example:

Unexpected expenses, for example:

To make sure you've recorded all your expenses, look at your bills or bank statements. If you tracked your spending, use your list of transactions.

3. See if you can save


4. Set your spending limit

The money you have left after expenses and savings is your spending money. This money is for 'wants', such as entertainment, eating out and hobbies.


Set up three bank accounts: a high interest savings account for savings, and two transaction accounts for spending and bills. Schedule transfers of your savings and direct debits for your bills to automate your finances.

Review your budget regularly

It's important to adjust your budget as things change. For example, if you find you can't cover all your expenses, savings and spending, you may have to reduce your spending limit, or change your savings goal.
