How to make a monthly budget

Boxes of cereal are a fiver, rent’s gone up again, and energy bills are through the roof. The cost-of-living crisis is hitting hard, and it can feel like you’re fighting a losing battle.

But don’t panic: a little organisation can make a big difference. And the best way to start taking control of your finances is to make a budget.

Add up your income

Start by figuring out how much you have to spend each month. Include your pay, as well as any income from benefits and pensions .

For any amounts you receive weekly, multiply the amount by 52 (the number of weeks in a year), then divide by 12 (the number of months), to get the monthly amount.

Make a list of what you spend

First, add up all your priority bills: that’s utilities, council tax, and rent/mortgage. Also include non-priority bills, like credit cards, unsecured personal loans, buy now pay later, etc.

Next up, regular costs and subscriptions that are usually the same every month. This includes things like car and other insurance, your phone bill, but also entertainment streaming services, and kids’ activities and classes.

Then, consider how much you need for living expenses – food, transport, petrol, clothing, toiletries etc. These can vary slightly month to month, but even if you can’t be totally accurate, realistic estimates will still help you budget. If you’ve got pets, don’t forget their food, litter etc.  

That should leave you with how much you’ve got spare. Decide how much to put aside for treats, gifts and savings.  

Categorise your costs

You can use our online budgeting tool to work out a budget based on your incomes and expenses.

Or you could go about monitoring your spending the old-school way, with a handy excel spreadsheet. It may be easiest to keep receipts throughout the week, so you can keep track of what you’ve spent and update your spreadsheet every weekend.  

Free budgeting apps

If you’re anything like me, you might find it hard to stick to budgets without being able to visualise different types of expenses separately. A budgeting app could be the solution.

There’s a range available, many with free features that allow you to set savings goals and categorise your costs by type so you can make sure you’re sticking to your plan. Some budgeting apps have a built-in debt tracker to help you stay on top of what you owe.

Certain budgeting apps let you link your bank account to update your budget lists every time you pay for something. This can be a great way to track your spending automatically without much effort.

But if you’d prefer the app didn’t access your account, there are plenty that let you budget manually.  

Budgeting banks

If you’re looking for a more direct way to organise your spending, consider opening an account with a bank that offers budgeting features. Think Money, Monzo, and Revolut, for example, let you split your money across different ‘pots’, or ‘pockets’, for different purposes.

With a budgeting bank account, you could add all your utility costs to your ‘bills’ space, and set up different spaces for hobbies, holidays and long-term savings. If you know Christmas is coming up and you need to start putting money aside for presents, put it all in your ‘gifts’ pot.   

Do you need budgeting help?

If you’re feeling overwhelmed and aren’t sure where to start, we can help.  

We can put together a budget to help you stay on top of your costs, talk you through grants you may be eligible for and check whether you’re entitled to any benefits.

All our advice is free and impartial. We can discuss suitable debt solutions and point you in the right direction. We also offer debt solutions - some free and others with a fee.

Find out more on our website, or give us a ring.