How to Make a Budget (And Stick to It!)
What is Zero-Based Budgeting?
'Zero-based budgeting' is a way to plan your spending from scratch every month. Instead of looking at past spending, you give every pound you receive a purpose until no money is left without a job.
Here's a step-by-step guide to setting up a zero-based budget:
Step 1: Know Your Total Income
This is all the money you get in a month, such as:
- Your salary (after tax)
- Benefits (like Universal Credit)
- Extra money maybe from selling items or help from family
Example:
- Salary: £1,200
- Benefits: £600
Total Income: £1,800
Step 2: List Your Monthly Expenses
Write down everything you need to pay for. Start with the most important things first:
- Essential Bills (rent, gas and electric, food, transport, phone etc.)
- Debt Repayments (loans, credit cards)
- Savings (for emergencies or future plans)
- Extra Spending (activities, subscriptions, hobbies)
Step 3: Give Every Pound a Job
Take your total income and divide it across your expenses, some things will be a set amount and some can change each month. The goal is to budget all your money down to zero-this ensures everything is planned for.
Example:
Income: £1,800
- Rent: £800
- Council tax: £120
- Utilities: £100
- Food: £250
- Travel: £100
- Debt repayment: £200
- Phone: £50
- Savings: £50
- Entertainment: £50
Total Expenses: £1,800
Step 4: Track Your Spending
Throughout the month, check your plan to make sure you're not spending too much in one area. You can use a notebook, an app, or keep receipts to stay on track.
Step 5: Adjust if Needed
At the end of each month, look back at your budget. If you're spending too much in one area, but not as much as you expected in another, change the budget next month. Life changes, and your budget can too!
Why Use Zero-Based Budgeting?
This method helps you control your spending and focus on what's most important. It's great if you find yourself on a tight budget, because it makes sure every pound goes where it's needed-no money gets wasted!
We have even included a spreadsheet to get you started, just fill in the Expected Spend column with the amount you plan to spend in each category. Make sure the Total Income matches Total Expenses; every pound should have a purpose!
At the end of the month, enter the actual amounts spent in the Actual Spend column. If there are any big differences, you can make changes for your spending in the next month.
Make Your Own Budget!
Download our template here: Zero based budgeting template.xlsx [xlsx] 10KB