Many people find the task of personal budgeting overwhelming. Most only have a sense of their annual income and salary, but have little understanding of outgoing expenses – like tracking the costs of our food shopping or drinks on a Friday night. By getting a better grasp of our finances, saving up for those big and small milestones in life will become easier.


Why bother? Personal budgeting can help you save for that holiday you’re planning, or a mortgage, but it can also help you reach the smaller saving goals, helping to build your wealth and prevent you from going into your overdraft. By taking measures to ensure you don’t spend more than you earn, you’ll be on the road to financial wellbeing.

Why are so many of us reluctant to make these positive steps? For some, it can be daunting to know that once you’ve written it down, it’s firmly in reality. But no one should keep themselves in the dark out of fear. So follow these simple steps towards financial wellbeing, and you’ll soon be thanking yourself.

Step 1: Make the positive decision and open up that spreadsheet

This is often the most difficult part. It can seem daunting and time consuming but it shouldn’t be. Whether you use a spreadsheet, an online tool or pen and paper, make the positive step of keeping things up to date and open up that spreadsheet!

Step 2: Delve into your accounts

you’ve made the positive decision to start personal budgeting, it’s now time to do a full audit of your accounts. From savings to current accounts, getting a clear idea of where you stand financially will give you a clear head and provide a sense of wellbeing.

Step 3: Navigate your incomings

How much do you earn? For some, this could be as straightforward as checking your pay slip, but for those with irregular incomes, it’s a trickier equation. Finding an average monthly income is key to personal budgeting: average out the last 6 or 12 months, and be conservative with your estimations.

Step 4: Navigate your outgoings

Your regular outgoings can be simple to figure out: these can include a car loan, health insurance, mortgage, credit card, student loan… the list goes on. Find the total of each of these payments and you are left with your total monthly outgoings.

For everything else, like your monthly household expenses, it can be trickier. Keep your receipts for a couple of months and soon, you’ll figure out what you’re spending money on in your household.

Finally, what does all of this mean?

Keeping track of all of this information about your personal spending, you’ll have a clearer head. Don’t worry if the sums aren’t adding up just yet, this just means you’ll be determined to make more positive steps towards living within your means. This is work in progress, and you should continually monitor yourself.

For more useful resources, you can visit our financial planner or we recommend the budget planner from MoneySavingExpert.