Budget Planning Advice

Step 1: Understand Your Current Finances

Before you create a budget, you need to clearly understand your financial situation. Start by:

• Listing all sources of income, such as salary, benefits, side earnings, & bonuses.
• Reviewing your last three months of bank statements.
• Categorising your expenses: housing, utilities, groceries, transport, subscriptions, entertainment, & personal care.
• Noting spending patterns & identifying small costs that add up (like daily coffees or takeaways).

Step 2: Set Clear Financial Goals

A budget is most effective when you have a clear objective. Define what you want to achieve by:

• Deciding whether you're saving for a mortgage deposit, remortgage fees, or to pay off debt.
• Thinking about building an emergency fund or saving for retirement.
• Writing down your goals & assigning a realistic timeframe to each.
• Prioritising which targets are most important to your family or personal situation.

Step 3: Create a Spending Plan

A spending plan helps you direct your money where it matters most. Consider:

• Using the 50/30/20 rule: 50% for needs, 30% for wants, 20% for savings & debt repayment.
• Adjusting these ratios to fit your monthly life & goals.
• Ensuring you assign enough towards priorities like your mortgage or future home deposit.
• Reviewing which expenses you can trim to boost your savings or reduce debt.

Step 4: Build an Emergency Fund

Life is unpredictable, so an emergency fund provides important financial security. To build yours:

• Aim to save three to six months of essential living expenses in an easy-access account.
• Make saving automatic by setting up a regular transfer, no matter how small to start.
• Treat this fund as protection against unexpected costs, not as extra spending money.
• Increase your contributions as your financial situation improves.

Step 5: Review & Adjust Regularly

To keep your budget working for you, review & adjust it every month. Remember to:

• Check if you overspent in any categories & explore the reasons why.
• Look for subscriptions or recurring bills you can reduce or cancel.
• Update your budget if your income or financial priorities change.
• Celebrate progress & keep motivated by tracking your achievements over time.