How to set a budget and stick to it

Learn how to successfully squeeze your budget.

Saving and Making Money

Get organised

Gather together all your paperwork
If you've been sensible, all of your paperwork will be neatly filed away in alphabetical/chronological order. But we’re betting it’s not. In fact, we’re betting your paperwork is lying in a disorganised pile somewhere.

Unfortunately, the first step of budgeting is to get all of this together - that includes all of your bank statements, credit card statements, pay cheques, utility bills etc. It's hardly the most exciting of tasks, but you'll feel a great sense of relief once it's done!

Set up a spending diary
It can be very easy to lose track of what we're spending where. So to help you understand your spending habits, it's worth setting up a spending diary - in other words, a list of what you spend where.

You can do this using the free MoneyTrack tool at If you register your accounts, every time you make a purchase – no matter which bank account or credit card you use – the tool will record it for you, and then allow you to categorise all your transactions so you know exactly what you're spending your money on every month.

Alternatively, every time you take out your wallet to make a purchase, make a record of it. Don't leave anything out, no matter how small - you'll be surprised how the little things add up! It's worth doing this for an entire month to help you get a detailed picture.

Personally, we think using our MoneyTrack tool is a lot simpler, which is why we developed it – why not take a look and see for yourself?

Make a claim
If you’re on a shoestring budget, don’t be too proud to claim what you’re entitled to.

The Turn2Us website can help you track down the relevant benefits and Tax Credits.

Draw up a budget

Make a list of your earnings and outgoings
If you've already completed task number one of this guide, you should have got to grips with your spending habits.

The next step is to make a list of all your outgoings and earnings. This is where our MoneyTrack tool really comes in handy! It shows you exactly what you’ve spent your money on – and how much income you’ve gained from different sources (like gifts, salary, benefits or interest from savings).

Once you have a couple of months’ information, use it to calculate your income as an annual figure rather than monthly, because monthly figures can vary considerably - for example, you might be paying out for a holiday one month, or Christmas presents the next. Once you've worked this out, include any regular annual expenditure on things like insurance policies. Then divide the result by 12 or 52 to figure out average your weekly or monthly expenditure.

If you don’t fancy signing in to MoneyTrack (using your existing log-in), a slightly more time-consuming alternative is to use this statement of affairs calculator.

Cut back!
Once you've done all this, it's time to ask yourself the big question. Are you spending more than you earn?

If, much to your horror and disbelief, the answer is yes, you'll need to tackle this head on.

To do this, it's worth examining your outgoings to see whether you can make any cutbacks. Perhaps you could reduce your socialising, food bills, or clothes shopping. Maybe you could start bringing your lunch to work, or give up that cappuccino from Starbucks every morning.

It's important to be realistic when you're doing this - don't set yourself an impossible task that you know you'll never stick to.

And you can easily set yourself a budget thanks to our MoneyTrack budgeting tab, which allows you to set a monthly budget for any specific category (such as petrol and fuel). You can then track your progress through the month against the budget you set.

Make use of your leftover money
If you're lucky enough to have some spare cash at the end of each month, don't leave it sitting in your current account, tempting you to spend it. Instead, move it into a savings account. It's worth setting up a standing order for this so that the money moves out of your current account and into your savings account before temptation strikes.

Alternatively, use it to pay off your debts.

A final note
Finally, don't forget you should review your budget on a regular basis to make room for any changes in your outgoings/earnings - for example, if you receive a pay rise, or your landlord increases your rent. Reviewing your budget will also help you to assess whether you're on track with your finances.

Get a better deal

Squash those interest payments
If you’re on a tight budget, it’s particularly important you cut interest payments wherever possible. So if you've got a lot of debt on a credit card, see if you can transfer it to a 0% on balance transfer card which will give you time to pay off your debt interest-free.

On the other hand, if you know you won't be able to pay off your debt before the 0% period expires, it's a good idea to transfer your debt onto a lifetime balance transfer card instead. This type of credit card offers a low rate of interest for as long as it takes you to clear your balance.

Just remember that you're still paying interest, so it's important you clear your debt as quickly as possible.

Consider remortgaging
If your introductory deal is about to come to an end - or you don't have a special rate at all - you may be able to make big savings. Compare some of the top mortgage deals available at the moment.

Slash your energy bills
Make sure you’re not paying more than you need to for your gas and electricity. If you've been on the same tariff for a while, it could pay off to hunt around for a better deal.

Check out our gas and electricity comparison centre which will show you how much you could save money by switching suppliers.

Shop around for better broadband and phone deal
Taking the time to shop around and find a cheaper broadband/mobile phone provider can really pay off and you could find yourself saving hundreds. You can use partners to see if you can get a better broadband deal and Recombu to compare mobile phone deals

Make cutbacks

Make your own lunch
Instead of buying a sandwich every lunchtime, simply make your own and take them into work.

A £1 packed lunch, rather than a £6 bought lunch, will save you £115 a month (based on 23 working days). Read Have a posh packed lunch on a budget for some inspiration for lunch ideas!

Ditch the coffee
If you currently buy two coffees costing £2.30 a working day, you'll make a saving of £105.80 a month by giving them up! Why not simply invest in a flask and make your own coffee at home to drink on the way into work?

Scrap the luxuries
Finally, get rid of all the luxuries you don't really need. This means cancelling the digital TV subscription, the gym subscription and the magazine subscriptions. Giving up smoking and cutting back on the booze will also save you a packet.

Save on your shopping

Shop secondhand
One man's trash really is another man's treasure.

Freegle, eBay, eBid, house clearance shops, rural auctions, charity shops and car boot sales are all great sources of secondhand gear.

Use price comparison websites
When shopping online, use a price comparison site like Kelkoo or PriceRunner. These sites will scour those retailers with an online presence, to find out where to get the item you want at the cheapest price.

Save on your food bills
When it comes to food shopping, MySupermarket is in a league of its own. This site allows you to compare the price of items sold at Tesco, Sainsbury's, Asda, Morrisons, Aldi, Waitrose and Ocado so you can hunt down the cheapest broccoli or the best value beef.

It's worth taking a look at deep discounters such as Lidl and Aldi. Their prices are lower than many other supermarkets because they keep shop overheads low.

Local markets and stalls are also great places to buy good value fruit and veg.

Swap, don't spend
If you can’t afford to buy an item, see if you can swap something for it instead. There are stacks of websites out there that allow you to swap books, clothes, make-up, you name it!

You can swap old books for new using free bookswap sites like and Or for DVDs try Filmcircle.

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