How I Budget and Save My Money

Photo of a budget plan in my bullet journal. It includes income, savings, fixed expenses, variables expenses and free spending.

Money is a topic that is often shrouded in privacy and secrecy despite being one of the most dominating forces in our lives. People often keep their financial situations and how they deal with them private, and combined with the fact that money management is rarely taught at school, it can be difficult learning how to control your finances at a young age.

Finally after 7 years of earning money, I’ve figured out a system that works for me and my situation. I recently shared a picture of my budget plan on my Instagram and the reception was better than I expected, so I thought it would be interesting to share how I organise my money. I for one would have appreciated seeing something like this when I was a bit younger!

A bit of a disclaimer: everyone has a unique financial position, so this method may not suit everyone. However, I think it can easily be adapted to fit a lot of different situations. I currently work full time with a set wage every month, however in my previous job my wage fluctuated based on the amount of hours I worked, and this method works for both of those situations. Regardless of your circumstances, I hope you will find something useful here, whether that be a step that you may not have tried before, or just some inspiration to review your own ways to manage your money to suit you.

And lastly, I’m by no means a financial expert. I’m just an ordinary person trying to figure it out, so if you are really struggling with money it might be useful to seek some expert financial advice.

With all that said, here’s my step-by-step guide to managing money:

Photo of a budget plan in my bullet journal. It includes income, savings and fixed expenses.

Step 1: Work out your monthly income

Start off by identifying exactly what money you have to work with for the month. For me, I use my pay slip as my starting point for each new month. If your income is sporadic, then try to project a rough estimate for this first step.

Step 2: Fixed expenses

Take a look at how much will definitely be leaving your bank this month. Things such as rent, bills, any subscriptions or contracts you pay for monthly like Netflix, Spotify or your phone. Basically anything that is coming out no matter what. I write all these out with the date they come out of my bank.

Step 3: Variable expenses

This section is for expenses that I have some control over, but are still essential spending for that month. This might include food shopping, petrol, pre-payment meters or any beauty appointments I have booked. If I have any planned events coming up such as a night out or a meal, I will also include this here. Basically, anything that you know you will be buying that month that isn’t a specific amount would go in this section.

Photo of a budget plan in my bullet journal. It includes savings, variable expenses and free spending.

I think this is a very personal section, as we all have different priorities in what we regularly buy. It might be helpful to review your previous bank statements and see what kinds of purchases are important to you, and try to account for these things here.

Once I’ve written my list of variable expenses, I add a rough estimate of how much I will spend on each one until my next payday. For example, I usually go food shopping once a week, so if there’s four weeks between my paydays I’ll account for four trips in my estimate. I also tend to add a bit extra per week to account for a takeaway or an extra trip to the local shop. Similarly, with petrol if there’s days I’m travelling further that month, or not at all, I’ll try and account for that in my estimate.

A tip here is to budget for the higher end of your estimate you set, so for example if you usually spend between £30 and £40 on food shopping a week, budget for £40 and you will stay on track.

Step 4: Saving

With all the above written out, I subtract my fixed expenses and variables expenses from my income and see what I’m left with. Then I figure out how much I can afford to save. I make every effort to save as much as I can, whether its for large or unplanned purchases, or as a safety net in case something unexpected happens. I am quite precious about my savings and once I transfer money in, I pretend that it no longer exists so that I’m not tempted to dip into it unnecessarily.

Something I’ve been trying recently is overestimating how much to save, because in the back of my mind I know I can always withdraw from it if I’m struggling, but if I’m doing okay I will have saved more than I thought I could. The only downside is that if you overestimate too high, it can be disheartening to withdraw some and see the total go down, but it can be a good experiment to try with yourself.

For instance, I once set up a standing order to automatically add money to my savings, but I forgot I’d set it up so I was also manually transferring the same amount over. When I eventually noticed, I realised I could actually afford to save that amount, when I thought I had only been saving half.

Basically, it can be eye-opening to test what you can actually afford to save, plus it can also encourage you to be more conscious of your spending if you “trick” yourself into thinking you have less than you do.

Step 5: Extra savings

This is where I really go OTT to try and save any little extra change I can! I usually use these three methods to save anything extra:

  • Save anything from last months wage – I personally like to start each month afresh, so I take anything that’s left over from the month before (even if its pennies) and move that into my savings.
  • Use round ups from transactions to save extra money – I use Monzo for this, but I’m sure that other banks have this feature too. It basically rounds up any transaction you make and puts the extra into savings, so if you spend £2.70 it will round it up to £3 and add 30p to your savings. This is a great way to passively save money and I usually save around £10 a month using this.
  • Round it up again – It pains me a little to see an odd number in my savings, so I try to round it up to the nearest ten, fifty or hundred if possible.

Step 6: Free spending

So after all that planning and saving, everything I have left becomes free spending. I don’t budget any of this money, because it feels good to maintain some freedom in my spending. This usually goes on things such spontaneous nights out, going out to eat, online shopping or getting a takeaway.

By having this amount written down and visible to me, I can make a mental note of what I can and can’t afford that month but it also doesn’t feel as restricted as planning a set budget for it. After all, I work hard for my money so it’s nice to be able to spend some of it without worrying.

It might be useful to put this money onto a separate card or pot, just so you don’t accidentally dip into anything important such as your fixed expenses fund.

Final thoughts

Ultimately, I find it really rewarding to be in control of my money and savings, and I feel that it is important for my own satisfaction and peace of mind.

However, I do think it’s worth remembering not to be too hard on yourself. After all, you work hard for your money so you deserve to treat yourself! But treating yourself feels much better when you know you have every other expense covered.

I hope you’ve found something useful here, whether it’s a tip you haven’t tried yet or just the motivation to review your own money management and seeing how you might improve it.

Happy saving!

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