Most budgets fail because they're built on guesses. The fix is simple: find out where your money really goes first, then plan.
Step 1: Track before you plan
For one month, note every payment. Your banking app can do most of the work. Group spending into a few categories: housing, bills, food, transport, debt, fun and saving.
Step 2: Try the 50/30/20 split
A popular starting point is to split take-home pay into:
- 50% needs: housing, bills, food, transport
- 30% wants: eating out, hobbies, holidays
- 20% saving and paying off debt
In much of the UK, housing alone can take more than half of take-home pay. If your needs are higher than 50%, that's normal. Shrink wants or saving for now, and revisit as things change.
Step 3: Give every pound a job
Set a limit for each category and decide what's left over goes to savings or debt. Paying yourself first, on payday, works better than saving whatever is left at the end of the month.
Step 4: Review monthly
Spend 15 minutes at month end comparing the plan with what happened. Move the limits, not the goalposts.