5+ Budgeting Strategies That Work!

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If you’re anything like me – you’ll find budgeting hard. Its like fighting over a duvet that’s a little bit too small – there just never seems to be enough to cover your butt!

During our recent radio show, (The Money Mindset Show – 12/04/2018), myself and co-host Catherine Morgan spoke about budgeting with Starling Bank’s Chief Platform Officer Megan Caywood. We put the question out to our followers – “how do you budget?

The responses we had were really interesting!

For some people, they never go over the amount of money they have, so budgeting is not something they actively “try” to do. For others, they never seem to have enough. I believe though that creating a budget (or spending plan if you hate the b-word) is really the only way of being able to gain full control and awareness of your money.

So what I’m really saying is, whether you love it or hate it, budgeting is essential.

Trial and Error

Like a serial dieter, I have tried a lot of different budgeting styles. I use them differently depending on what’s going on in my life.

Here’s a list of the budgets I have tried, as well as some that I haven’t, but have been raved about by my Private Facebook Community.

1. Good old fashioned pen and paper

I was taught this method from an early age by my mum. Admittedly, this has never caught on for me. I find it tedious, but I know it works for her, and I know it works for others too.

THE METHOD – buy a cheap note book. On page one, write out all your outgoings – include everything, going out, bills, mortgage or rent etc.  Add it all up (calculator optional!). Now list out your incoming cash.

The calculation is: incoming money – outgoing money = What’s the difference? Are you in the positive or the negative?

If negative, how did you get though the month, was it a credit card/overdraft/borrowed cash from a partner etc.

If positive, what are you doing with the spare cash? Is it going towards savings/investments etc.

For the next month, track all your outgoings. Use a page a day if you like. My mum never throws out a receipt until she has logged it in her book. Once its logged, she’ll work out how much money she should have left in the account, and will check it with her bank periodically.

TOP TIPS TO TRY – work out how much you spend on food shopping/meals out/personal care/fun etc for a month (after allocating money to all the bills). Divide this by 4 – this is how much you have to spend each week. Use your note book to track. It makes you hyper-aware of how much you have left to spend, rather than what you think you do. Try tracking this for a few months. Are there any changes you can apply to your spending?

2. Envelopes

I use this when I feeling especially strapped for cash. I find it really therapeutic to just use cash sometimes. Let me go through it now:

THE METHOD – Aside from your savings, investments, main bills and debt repayments etc (which should be on direct debit), work out how much money you have left for fun stuff, groceries and anything else you go shopping for.

Buy some envelopes – they can be the paper kind, or you can opt for some nice plastic ones from somewhere like ebay or amazon. You’ll be using them a lot, so it’s probably worth it.

Label each envelope – for example, you could use PETROL/GROCERIES/CLOTHES/EATING OUT/KIDS/THINGS I DIDN’T BUDGET FOR, but basically set it up however you like.

Next, withdraw from your bank account the money you will need to cover all these expenses for the month. If you are paid weekly, or some other variation, obviously do it as you get paid.

Put the cash you have allocated into each of the envelopes. Great! Now you have set up your envelope system. You task is to spend no more than what is in those envelopes. If you overspend in one category, simply move money from another envelope to balance it out.

Credit: Pixabay

TOP TIPS TO TRY – instead of envelopes, you could try jars or brightly coloured boxes. If you have children, have some fun together and decorate them. You could even get them started on their own.

Any money left over in the categories you have set can then be used on a big thing you’re saving for, such as an emergency fund, or you could be even more savvy and start investing (you only need £25 per month to get going with this). Don’t be tempted to blow every single last penny in the envelopes if you don’t have to. Equally though, don’t beat yourself up if this doesn’t work for you straight away. If you regularly overspend in a category, either you need to cut down, or you need to allocate more of your budget to it.

3. Spreadsheets and multiple accounts

This is my personal favourite and my current method. You can have access to the version I use here. And the “how to” video here.

THE METHOD – I use my spreadsheet to do five things:

  • Plan my spending for the month ahead
  • Record my spending throughout the month
  • Track how much I spending in 7 key areas and modify as I notice patterns (giving/education/debt/emergency/investing/saving for big things/everything else)
  • Track my net worth (which gives me an overall indicator of how well I’m doing)
  • Keep an eye on how much I am managing to save

Not everyone likes spreadsheets, and many people are scared of breaking them. The one I use has been locked, so only certain boxes can be altered. I prefer to use a spreadsheet because I can get intimate with my numbers. I’m not pulling them in automatically, as I feel that psychologically this doesn’t help me to fully embrace what I’m seeing.

Knowing what your net worth is gives you a powerful reminder of what your money habits are. If you’re in a lot of debt, and continue to overspend, your net worth will continue to be low or negative (don’t worry – most peoples are). If you are a saver or an investor, and the amount you have allocated to these areas exceeds any debt you have, then you’ll have a positive net worth.

You can read more about these concepts here.

TOP TIPS TO TRY – If you don’t want to use my spreadsheet, why not try making one of your own? You can track anything you like. Perhaps you want to monitor your credit score, or you want to track how much you spend on food etc. Providing you are consistent with the method, and you pay attention to what the numbers are telling you, it will work! Don’t forget to factor in yearly expenses like car insurance – divide the amount by 12 and allocate the money per month into a savings pot somewhere ready for when you need it.

Open more than one bank account – I’ve combined this with my spreadsheet budgeting to make it easier for me to monitor. See my quick drawing. Each box represents a separate account I have set up.

I have one main account where everything happens – money in, money out. Then, I have lots of separate current and savings accounts (mostly all with the same bank, but my fun one is with a different bank so I don’t feel tempted to “steal” money from anywhere else) that are free to open and don’t cost me anything to run. Every month, I send a direct debit to each of these allocations. I try to put something in each account even if it is just a few pounds per month. When debt is paid off, more money will be freed up to allocate. It might seem overkill, but when I allocate money in this way, I can easily see the balances and know how much I have left to spend during the month.

If you have never done anything like this before, it will take a while to build up the savings, but this is ok. Start where you are and stay persistent!

4. Apps

No budgeting round-up is complete without throwing a few apps in the mix! Personally, I don’t use them because I find them hard to get my head around, but maybe this will change with time. I like the control of having my spreadsheet, and I figure that as I’ve found a thing that works for me, then that’s ok!

YNAB – The “you need a budget” app is all about making sure you allocate every pound to a spending category. Its very similar to the envelopes in that sense, but digital! It costs £6-7 per month to use, but you can trial it for free for 34 days.

Its American though, so as far as I’m aware, if you’re not in America, you can’t hook up your bank account to it, but to be honest, this is a good thing because then you have a much better sense over your numbers anyway when you manually input them.

My facebook followers rave about YNAB, so why not try it out for yourself using the free trial? If you don’t like it, just remember to cancel the subscription payment before is taken.

Banktivity – this is budgeting software for mac users. Again, it is American and it is paid for, but I have also heard great things about it from those that use it. The app allows you to track your investments as well as your day-to-day budgeting, and I think this is actually a very good idea to have it all in one place. They use the same concept as envelope budgeting, just online!

Digital BankingStarling Bank in the UK have released an app that helps you to track your spending. Its based in the UK, and you hook it up to your bank account. Then, when you buy things, you can assign them “tags”. This tracks how much your spending and in which tag category and brings awareness to it. You can also allocate money into savings pots which is again, a bit like a digital envelope system!

5. Alternative Methods


Japanese Budgeting – Kakeibo. This is a method I read about recently online. It is a traditional method that involves “journaling” rather than “budgeting”. You use the book to journal your spending by planning before you do it, tracking it during the month, and then reflecting on it at the end of the month. It is very thorough! There’s a great review of it here.

The 20-30-50 rule – this is a budget for minimalists and people who want a speedy solution!


20% of your income goes on finance goals like investing, saving or paying off debt.

30% of your income goes on flexible spending. This could be allocated to whatever you want.

50% goes on your essentials – bills, rent, mortgage, food shopping etc.

See what I mean about minimalism? I think the problem with this method is that it could leave you open to forgetting about certain things like car insurance payments etc, so as long as you leave money behind in your account for stuff like this, you could be onto a winner.

The Mini Millionaire has a fab review of this.

So there you have it – a budget for all! Whatever combination you pick, as long as you stick with it month after month, you will be successful.

Good Luck!

Now over to you – which method do you use/will you be using? Let me know in the comments or head over to my Private Facebook Group and tell me there!





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