How to set up a budget
Are your personal finances giving you a headache? Do you know how much you’re spending and what you’re spending your money on? Do you think you should save money for a rainy day but just can’t seem to find any money at the end of the month?
Setting up a budget is a great way to get a handle on your financial situation, to plan for the future and to sleep well at night.
In this week’s video I explain how I budget for things and how this doesn’t mean I track every single purchase in a spreadsheet.
Creating a budget gives you the facts - you will see black on white how much money you earn, how much you have to spend on fixed costs like rent/mortgage, bills, groceries and transport, and how much is leftover for discretionary spending and - of course - savings.
Here are some categories I suggest you include in your budget. Add as many items within each as you need:
Income
your salary
any other income, e.g. freelancing, etc.
Expenses
Housing, e.g. rent/mortgage, home and contents insurance, council tax
Utilities, this includes electricity, gas, oil, water, phone, internet
Transport, e.g. train and bus tickets, car payments, car insurances, taxes and petrol/gas, repairs
Subscriptions, such as Netflix, Amazon Prime, Audible, professional memberships, Spotify, etc. (these can add up, so be sure to check what all the things are you’re subscribing to)
Groceries and household supplies: this is likely the one category where you spend a lot of money but may not know exactly how much, unless you’re tracking it or categorizing your card payments.
Personal care, e.g. hair dresser, cosmetics, hygiene products
Clothing and shoes
Pets, including food, vet bills, insurance, supplies
Entertainment, including eating out, alcohol, movies, taxi fees (unless you capture these under transport)
Hobbies, e.g. gym membership, bike repairs, music lessons
Savings & investment: I recommend adding this category even if you’re currently not allocating any money to it. That can always change ;-)
In future videos I will dive deeper into the various aspects of budgeting and saving, but for now, this is a great way to get started:
