Let's be honest—budgeting doesn't sound like the most exciting thing in the world. But if you're looking for more financial stability, less stress, and a better handle on your money, it's one of the best habits you can build.
With rising energy bills, inflation, and the cost of living creeping up (not to mention Christmas always sneaking up on us), even the most careful spenders can feel overwhelmed. That's where a budget comes in—it's your personal plan to take control, prepare for the unexpected, and still enjoy life along the way.
Here's how to create a budget that works—and more importantly, how to stick to it.
Step 1: Write Everything Down
Whether you're a spreadsheet wizard or prefer scribbling in a notebook, the first step is to track your spending. For one full month, write down everything—yes, everything—you spend money on. That includes:
• Direct debits and standing orders
• Household bills
• Groceries and takeaways
• Coffee runs and impulse buys
• Cash spends (keep those receipts!)
At the end of each day, circle anything that wasn't essential. Be honest with yourself—do you need that £4 coffee every morning, or is it just a habit?
This step alone can be a real eye-opener. You might find you naturally start cutting back once you see where your money's going.
Step 2: Sort Your Spending into Categories
Now that you've got a full month of spending in front of you, split it into two columns: Essentials and Non-Essentials.
Essentials are things you need to live—rent or mortgage, utilities, basic groceries, transport, and so on. Everything else? That's a want, not a need.
Be realistic. I love a glass of wine with dinner, but if I'm being strict, that's not a necessity—it's a treat. The more honest you are here, the more accurate your budget will be.
Step 3: Plan for the Unexpected
Budgets aren't just about what you know you'll spend—they're also about preparing for what might change. Is your mortgage rate about to go up? Got a few long car journeys coming up? Build in a buffer for those.
Once you've got your monthly expenses figured out, try one of these two methods:
Option 1: Weekly Cash Allowance
Work out your essential costs, then withdraw the rest as weekly spending money. If you blow week three's money in week one, it's a sign to rein it in.
Option 2: The Two-Account Trick
This is my go-to. I have one account for bills and savings, and another for spending. I "pay myself" a set amount each month into the second account—that's my fun money. No risk of accidentally spending the rent!
Whichever method you choose, make sure you save before you spend. Too many people plan to save what's left at the end of the month—and end up saving nothing.
Step 4: Be Kind to Yourself
Budgeting isn't about cutting out all the fun. It's about balance. A good rule of thumb is the 50/30/20 rule:
• 50% on needs
• 30% on wants
• 20% on savings or debt repayment
And if you slip up? Don't beat yourself up. Just check in with your budget regularly—daily if you can, and definitely at the end of each month. Set a reminder on your phone. It keeps you accountable and helps you stay on track.
Step 5: Set Goals That Motivate You
Saving just for the sake of it can feel a bit… meh. But saving for a holiday, a new car, or to finally clear that credit card? That's motivating.
Write down your goals—short-term and long-term—and check in on your progress. It's a great way to stay focused and remind yourself why you're doing this.
Step 6: Avoid Temptation
Let's face it—temptation is everywhere. Shopping apps, online sales, supermarket "deals" that aren't really deals…
Here are a few tricks that help:
• Delete shopping apps from your phone
• Plan your meals and stick to a shopping list
• Don't buy anything that's not on the list (yes, even if it's on offer!)
• Avoid browsing when you're bored or stressed
You'll be amazed how much you save just by being intentional.
Step 7: Don't Tease Yourself with Treats
Shops, adverts, and social media are designed to convince you that what they're selling is essential—and with next-day delivery just a click away, it's easy to fall into the trap. But here's a trick that works: if you spot something you really want, add it to your online basket and leave it there for 30 days.
If you still want it at the end of the month—and you can afford it from leftover spending or next month's budget—go ahead and treat yourself. If not, remove it and move on.
Living on a budget can be incredibly rewarding, especially when you hit your goals. But let's be real—it's not always fun. Being too strict can backfire, making it easier to fall off the wagon. So yes, allow yourself small treats. They don't have to cost much, but they can make the journey to payday feel a lot more manageable.
The Bottom Line
Budgeting might come naturally to some, but for most of us, the toughest challenge is ourselves. Learning how to create and stick to a budget means recognising your own habits—and sometimes, those of your family too.
I know how hard it is to say no to my nephew when he's determined to get something, but budgeting is also about education. Talk to your family about your goals. Explain to your child that skipping the magazine today could mean a holiday next year. These small conversations help build understanding and support around your financial choices.
You don't have to do it alone. Whether it's with a financial advisor, a budgeting buddy, or just your own journal, staying accountable makes all the difference.
For more help and advice or to receive a complimentary guide covering wealth management, retirement planning or Inheritance Tax planning, contact Yorkshire Financial Planning on 01482 275540 or complete our contact form here.
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