Create a budget

You might be wondering if you really need to create a budget. Maybe you’ve managed this long without one. Or maybe you don’t know where to start.

Learning how to budget not only helps you feel more in control of your money, but it can also help you save for something special or feel more secure in uncertain times. Yes, it takes a little bit of time and energy to create, but you can’t put a price on the benefits – well, you probably could thanks to your budget.

So with that in mind, here’s how to get started:

1. Income and outgoings
2. Needs vs wants
3. Goals and dreams
4. Ways to save
5. Keeping track

Income and outgoings

To really understand your money, you first need to work out what comes in and goes out each month. So pick your format – app, spreadsheet, pen and paper – and start studying your statements. The last 3 months should do it.

Don’t forget to include any benefits, pensions or dividends you get in your income, as well as any quarterly or yearly bills in your outgoings. Also categorising your spending by groceries, clothes, eating out, etc will help give you a better idea of your biggest expenses. It can be quite eye-opening!

This step can be time consuming, so break it up into smaller chunks if that’s easier. Once you’ve laid the groundwork, everything else will fall into place.

Needs vs wants

Okay, so you’ve got your list of categorised outgoings, now it’s time to work out if they’re a need or a want. And be honest…

Your electricity bill? That’s a need. Family banquet meal from the local Chinese takeaway because you don’t really fancy the food in your fridge? As amazing as we’re sure that would taste, it’s a want.

By working out your needs and wants, you’ll be able to see where you’re potentially overspending, as well as areas that you could cutback to help you reach your goals and dream.

Goals and dreams

Here’s where the fun begins. Do you daydream of holidaying in far-flung places or how about driving around in a brand-new car? Maybe you want to build an emergency fund or be totally debt-free? Whatever you want to achieve, work out how much you need to save and how long it might take you to save it.

This is where your budget will really come into its own, as you can see where you could reign in your spending to help you save for your big plans sooner.

Ways to save

There are many ways to save money each month. You could start with something simple like transferring an affordable amount into a savings account on payday every month, so it’s not tempting to spend it. Our savings tips guide is packed with tips and tricks to help make saving a little easier. 

If you spot something you’d like to buy, like trainers or a jumper, you could save the cost of it rather than spend it. You might be surprised by how much you could save this way. 

Or you could try one of the many savings challenges, like the no spend challenge. This aims to help you cut back and stop spending on non-essentials. 

However you decide to save, our savings accounts could help you get a little more from your money. From bonus interest rates to tax-free savings, we’ve got something for every type of saver. All our savings accounts are for existing 1st Account customers only.

Keeping track

Finally, don’t forget to keep track! Not only to make sure you’re sticking to your plan, but to celebrate your progress too. Whether it’s monthly, fortnightly or weekly, it shouldn’t take long to run the numbers and make sure it all adds up. And if it doesn’t, don’t worry. Life is always throwing us curveballs – simply make some adjustments and carry on.

Knowing how to budget is a great skill to learn, so if you’ve got this far, you’re doing great.