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Five hacks to help you budget better

Struggling to budget? We help you take control of your finances

By Esther Shaw

Published: 25 August 2021

Woman using mobile phone against a painted blue wall

If you’re finding it hard to keep on top of the household finances as we come out of lockdown, you are not alone.

Many of us are discovering that now that we have more freedoms, we are spending more on things such as holidays, high street shopping, dinners out, and trips to the pub.

But if you’re worried about your finances taking a bit of a battering, fear not. We’ve rounded up five clever ways to help you budget – and get things back under control.

1. The 50/30/20 rule

The aim with this popular rule, is to spend no more than half your take-home pay each month on ‘essentials’ or ‘needs’ such as rent or mortgage, transport and travel, food and utilities.

After this, another 20% should go on saving. This can cover a multitude of things including paying down debt, squirrelling money away into cash savings, and also investing.

The remaining 30% is then ‘fun money’ to spend on ‘wants’ such as shopping, socialising and subscriptions.

Say, for example, you bring home £1,500 a month after tax, you would look to spend no more than £750 on needs and £450 on ‘wants.’ This would then leave you with £300 to go into savings.

The 50/30/20 rule can be a great way to put you in charge of your finances, while also seeing a nice little nest egg build up.

You can tweak the percentages a little, as these figures might not work for everyone, but as a rule of thumb, 50/30/20 is a good guide to go by.

2. Zero-based budgeting

With this method, you allocate all your monthly income to different ‘pots’ at the start of each month.

The various pots might include things such as rent, car money, holiday fund, leisure activities, eating out, clothes shopping, and saving. You keep allocating your cash to categories until all your money has been accounted for.

In other words, what’s coming in is exactly equal to what’s going out.

Once any one pot is empty, you can’t move money around – so you need to keep careful tabs on your spending.

But the big advantage of this method is the fact you’ll know exactly where your money is going.

3. Reverse budgeting

The focus here is on saving. You decide how much you want to slot away each month, and divert that cash as soon as you get paid. It might be worth setting up a direct debit straight into a savings account for the day after payday.

You then have the remaining money to pay for all your essentials. If there’s any cash left over once those essentials have been covered, you can treat yourself with a few specialty coffees, dinner out, or a new pair of shoes.

Reverse budgeting is a good option if you’ve set yourself a savings goal, such as taking the first step onto the property ladder.

4. Check out Couch to Financial Fitness

Taking its inspiration from the popular training app, ‘Couch to 5k’, this new tool is a fantastic resource which guides you through a programme aimed at helping you master budgeting – as well as other money basics.

The four-week online programme is free to use and can be tailored to your personal situation. The focus is on taking small, simple actions each week that will make you feel more in control of your money.

The tool has been launched by Government-backed MoneyHelper with the aim of boosting financial fitness as we emerge from the pandemic. Find out more here.

5. Download an app

Another great way to make budgeting simple is by downloading an app such as Money Dashboard or Yolt.

Money Dashboard sets budgets, creates categories for spending – such as ‘Christmas’ – and notifies you when you overspend.

Yolt breaks down your spending, creates budgets, sets saving goals, and uses ‘round-ups’ of your space change to maximise saving. You also get a ‘nudge’ to save when you get paid.

Both apps will help you ensure you’re using your money efficiently – and also help you reduce financial waste.

Tips to help you stick to a budget

  • Be realistic. Don’t immediately go for a super-tight budget
  • Set goals. This can help to motivate you
  • Be disciplined, but also give yourself some flexibility
  • Review things regularly. Accept that budgets may need to be tweaked

And finally, remember that the budgeting method you choose doesn’t really matter – as long as you go for the one that actually works for you