How to start Budgeting?

Know what your net income is

It might sound obvious but a lot of people budget based on their gross income and not what actually lands in their bank account. Your net income is what you take home after tax, National Insurance, pension contributions and any other deductions.

If your income varies from month to month, calculate the average over the past 3-6 months to help you get a realistic baseline to work with.

If you’re budgeting as a couple or as a household, remember to combine all sources of income including salaries, benefits, any side hustles or rental income to get the full picture.

Track Your Spending (Yes, All of It!)

Before you can start building a budget, you need to be clear about where your money is currently going. This means tracking every expense – no matter how small or insignificant it seems. That coffee on the way to work? The petrol top-up? That app subscription you forgot about? It all counts and you need to include all of it!

Use Budget Pro’s 30 day free trial to log and track your spending for a month. The app makes it easy to automate expenses and custom tags, making it easy to spot patterns and identify areas where you could cut back and optimise if needed.

Categorise Your Expenses

Once you’ve tracked your spending, it’s time to organise it. Break your expenses into two main categories:

Fixed Expenses: These are your regular, predictable costs which are typically the same every month and include things like rent or mortgage, utility bills, insurance and loan repayments.
Variable Expenses: These are the expenses which change from month to month and include groceries, dining out and what we like to call the “fun stuff”!. This is where you have the most flexibility within your budget and can make adjustments if you find your budget getting a bit tight!

It's really important when you label your expenses that you’re honest about which category they fall into. You should be aware of how much of your spending is absolutely essential and how much of it is flexible. We don’t view budgeting as cutting down on spending but more being aware of where your money is going. However, if you unexpectedly lost your income tomorrow, it’s good to know where you can make savings if you need to. Likewise, if you decide that you want to build up your savings, you might cut back on your variable expenses and redirect the money. Listing all your expenses can be a real eye-opener as to where your money goes so remember to be honest!

Using Budget Pro can help you customise your categories and set frequencies and exclusions so your budget is always accurate and on track.

Choose a Budgeting Method That Works for You

There’s no one-size-fits-all approach to budgeting. The key is to find a method that fits your lifestyle and financial goals. There are several different ways of budgeting and it’s up to you to decide which approach suits you. Some methods of budgeting include:

Zero-based Budgeting – Every pound has a job. With this budgeting approach, you assign every bit of income to a category – savings, bills, general spending – until there’s nothing left unallocated.
50/30/20 Budget Plan – this puts 50% of your income towards essential spending and the rest is split between the “fun stuff” and savings or investments
Reverse Budgeting – prioritises saving and then spending whatever is left
Envelope Budgeting System – this method of budgeting is a cash-based approach. For each budget category, you have an envelope which you assign money to. Once the envelope is empty, you can’t spend money until your new budgeting period.
The Weekly Allowance – this method is budgeting like a teenager! Allocate so much money to spend each week and once it’s gone, it’s gone!!

Adjust and Optimise Your Budget

Now comes the real power of budgeting: making your money work for you. If your expenses exceed your income, it’s obviously time to make some adjustments. Remember those variable expenses?! Consider whether you can reduce takeaways, cancel unused subscriptions and just generally, shop smarter.

If you’re managing to balance your income and expenses, perhaps with some money left over, well done! You’ve already got the hang of successful budgeting! Just make sure that you keep an eye on your budget. Reviewing and adjusting things regularly is a good money habit and ensures that you stay on track towards your financial goals.

Remember budgeting isn’t about restriction – it’s about freedom. When you know where your money is going, you can make confident decisions and plan for the future.

With Budget Pro, you can use our forecasting tools to plan the months ahead and track your progress towards your savings goal.

Ready to Begin?

You’ve got the tools, you’ve got the knowledge. Now it’s time to take control of your money and build a budget.

Head to our Getting Started page to set up your first budget in a matter of minutes.