A Simple Guide to Creating a Budget and Sticking to It

AD| Creating a budget is something I do faily often these days. As most of you know, I’ve recently told my employer that I am…


AD| Creating a budget is something I do faily often these days. As most of you know, I’ve recently told my employer that I am returning following maternity leave. Instead, I’m using my time to earn money from my blog and stay at home with my baby. As I no longer have a stable income, I’ve been sorting my finances out.

I’ve always been a bit careless with money. I’ve had a full time job since I left university and climbed the promotion ladder pretty quickly. I’ve never been rich, but I’ve always had money to spend on the things I want. Though one of my biggest regrets is that I didn’t save money when I could have. But there’s no point dwelling on that now. I lived a good life in my 20’s and have lots of memories to show for it.

For the past few months, I’ve been keeping an eye on what I spend and budgeting to ensure I don’t spend too much and get an idea of what I need each month.

I wanted to talk about how I budget and how I have created my budgeting plan.

creating a budget

Why Create a Budget?

A budget is a plan for expenses and income. It is the act of creating the plan for spending and saving. Most people create budgets in order to save money, avoid accumulating debt, or reduce stress. Often, making a budget is the best thing to do if you are struggling with debt or loans. This is because it can help you to better manage your finances, so that you are not feeling the constant stress of always staying on top of your bills.

Mostly, people create budgets in order to save money when it comes time to pay bills or when trying to pay off debt. A budget can also help individuals stay within their means in terms of what they spend on pleasures like entertainment and eating out.

Budgets can be used in order to avoid accumulating debts, which might take years to pay off if left unchecked or just paying the minimum payment. Finally, budgets can help reduce stress by helping control spending and limiting impulse purchases that often lead to financial trouble down the line.

My reasons for creating budgets are so I’m able to save money and overpay our mortgage.

How Does Budgeting Work?

A monthly budget form can seem complicated at first, but it does not have to be. By following these simple steps, you will be able to create a household budget that will help you maintain financial independence and peace of mind.

Some people find that they need professional help with their budgeting process in order to stay on track. A financial advisor can help by offering advice and guidance about how much savings should be allocated towards certain things like retirement accounts or insurance premiums, or if you have a lot of debt that they are struggling to manage. You can use free services like Step Change if you are worried about your debt.

Click here for some tips on sticking to a budget.

How to Make Your First Monthly Budget

The first thing to do is identify your reason for having a budget?

  • pay off debt
  • save for something expensive
  • buy a house
  • pay mortgage off early
  • invest in your future

Once you have your goal in mind ot motivate you, you can start getting familiar with your spending habits and knowing what you earn and spend each month.

You can use whatever tools work best for you, some people prefer pen and paper, but I prefer a spreadsheet. The first thing to do is list all your outgoings for a month and see how much it comes to. Then look at your salary (or your average/realistic income if you are self employed)

Do you spend more than you earn? Do you have a bit left over?

The next thing to do is analyse all your outgoings and see if there’s anything you can remove. Do you need your Spotify subscription? Do you need Netflix AND Disney+? How much is is your phone bill – can you lower it or go SIM only if your contract is coming up?

Remember that you still need to enjoy life. There’s no joy in cancelling Netflix if you watch it every day. But if it’s something you don’t watch often, then give it up.

How much do you spend on food and clothes? Can this be reduced? I did this exercise a few years ago and was spending £300 a month on food. Just on my own, for me. Mostly on Lunch at work – I would spend about £7 a day! I very quickly stopped doing that and started taking a packed lunch instead.

I’m unable to cover every possibility here, but you get the gist.

KNOW WHAT YOU ARE SPENDING and then see where you can reasonable cut back.

Next, set a budget based on what you expenses are, giving you some money for fun/entertainment.

So, for example: (This is an example – not my own)

Income – £2000

Mortgage – £750
Bills – £250
Food – £200
Phone Bill – £50
Car Loan – £200

Money left – £550 at the end of each month. I will put £300 into saving and give myself £250 to spend on other things (birthday presents, eating out, etc).

Have a sinking fund

A sinking fund is putting money aside for a future expense. This means that when that event comes, you don’t have a big amount to pay on your credit card. I use a Monzo account which let’s you save money into ‘pots’. I’ve got a fair bit of money aside for things such as:

  • Christmas
  • Birthdays
  • Car MOT and service
  • Car insurance
  • New laptop

Each month I will out a bit of money in the pots. Then when something big is coming up, I don’t need to worry that I’ll have no money that month. For example, my MOT and car service is actually next week. I’ve got £300 aside for it and it will cost me £210 (unless work needs doing!).

Have an emergency fund

Simillar to a sinking fund, but an emergency fund is money that will help you when you have unexpected expenses. Say if your car fails it’s MOT or your boiler breaks!

I have £500 in a savings account for easy access, but most of my emergency fund is actually in premium bonds so it can make some money, rather than being sat in the bank losing money. Interest is terrible on saving accounts so I would consider putting your money somewhere it will grow if you have a large amount!

Ideallly, your emergency fund should cover 6 months of your expenses if you lost all income. But if you have nothing, just aim for £100, then £500, then £1000.

Any money put aside for emergencies is good, no matter how small. Evey emergency fund starts somewhere so even if you put £20 a month away as it’s all you can afford, that’s still £240 a year. Don’t be dishearted at hearing other people having £10,000 in theirs! Just make a start.

Make a bit of extra money each month

We all have that one goal we want to reach. We all have that dream house, car, vacation, or anything else we want to do with our money. But as we get closer and closer to the realisation of that goal, it becomes harder and harder to save up for it. Espcially when the amount seems so big!

This is where apps can come into play or online tools can into play. Check out my making money on maternity post to see how I made a bit of extra cash each month things to things such as online surveys and refer a friend programs.

I do track my sidehustles and post them on my money blog, so you can see a breakdown of how much I’ve made each month here:

Again, you can spend all your time ‘side hustlng’ but you have to allow yourself time to relax and enjoy life!

How To Know If Your Budget Is Working And How To Manage An Unsuccessful One

If you are just starting out, it is difficult to know if your budget will work. You have to try it out and review at the end of each month. Be really honest with yourself if you haven’t stuck to it. Is it because you’ve not been trying?

Or is it because you’ve restricted yourself too much. It’s so important to give yourself a bit of money for fun things, if possible. We still have to enjoy live, despite saving money or paying off debt.

It’s okay to change your budget for you if it’s not working.

If you work better on paper, then you can download and print my free monthly budget tracker in this blog post.

So, is creating a budget at the top of your to-do list?


  1. Great post as always! I am so frivolous with money even when using a budget but you’ve provided some great tips here that I will definitely try to start utilising. Saving is a big thing for me – I never save because I never thought it was worth it as I am not in a position to put 10-20% of my wages away each month at the moment. However, your post has encouraged me to start putting a little away each month (even if it is just £20) into premium bonds and try to filter away all extra income I get too. Thank you for a very helpful and informative post xoxo

  2. This is a really great post about budgeting. I am meticulous when it comes to my personal budgeting but really need to get better with my bogging budgets. Thanks for sharing your tips!

  3. Great tips, and we have a bugdet as well. It helps a lot to save money and organize how much we spend and be responsible. This is very helpful!

  4. Love this so much. Such great tips, especially the sinking fund – something I wish I’d known when I was a little younger than I am now. I always have a budget, something i’ve done since buying my first house and it really does take so much pressure off. Thanks so much for collating and sharing 🙂

  5. Great tips… just when I needed it. I’ve been thinking of starting a budget plan. You really broke it done. I should check the surveys you recommend and pick the one that works best for me. Thanks for sharing

  6. A sinking fund is a really great idea! It can be difficult to budget for things on a monthly basis if they don’t happen every month.

  7. This was a really useful refresher for working on our financial health. I have been trying to save for an emergency fund but have struggled with it for a while but this post has solidified for me that it need to make it more of a priority moving forward. Thanks for these great tips!

  8. I’m so bad at managing my monthly budget! I’ve been wanting to start saving and reduce my expenses so this post is a GREAT reminder to me. I downloaded your budget planner and hopefully I can start creating my monthly budget this month, or at least next month. Thank you x

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