A Comprehensive Guide to Creating and Sticking to a Budget: : Guest post from Karen, Financial Coach and Blogger at Money and Marriage

When you think about budgeting, what comes to mind? For many people, budgeting means being constricted and having no money to spend at all. To be honest, I felt that way too.

Until a few years ago, when I discovered that you could have a budget line for ‘fun’ and everything changed!! 

For two years now, my husband and I have been sitting down every month and going through our money and making sure that every £ has a job. I won’t lie, it took us a few months to get it really working but now our budget is like a well-oiled machine! 

We have found that by creating a budget, we are able to make informed decisions about our spending, saving, and investing, ensuring our money is being used wisely. By creating and sticking to a budget, we are telling our money where to go, rather than wondering where it went!

I am now a complete geek when it comes to budgeting, and I want to share my top tips and with you! 

In this guide, I’ll walk you through the steps to create a budget and provide valuable advice on how to stick to it. I’m telling you that this will change how you think and feel about money forever! 

Step 1: Assess Your Financial Situation

Before diving into budgeting, take some time to evaluate your financial situation. Gather your financial statements, including bank statements, credit card bills, and any other sources of income and expenses. This will give you a clear picture of your financial income and outgoings.

Step 2: Set Clear Goals

Identify your short-term and long-term financial goals. Do you want to pay off debt, build an emergency fund or save for a holiday of a lifetime? Your goals will be your ‘Why’, your reason for both creating and sticking to your budget. Your financial goals give you a purpose for managing your money.

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Step 3: Calculate Your Income and Expenses

List all your sources of income, including your salary, side jobs, and any passive income. Then, categorise your expenses into fixed (mortgage/rent, utilities, insurance) and variable (entertainment, eating out, shopping). Be thorough and honest with yourself – leaving out expenses will only hinder the effectiveness of your budget. 

One top tip from me would be to keep a money diary for a week or more: write down everything you spend over the period of a week or longer. You may be surprised at where your money is going!

Step 4: Differentiate Between Needs and Wants

A crucial aspect of budgeting is distinguishing between needs and wants. Needs are essential for your basic well-being, like housing and groceries, while wants are non-essential expenditures like a new gadget or a new pair of shoes that you’ve seen in the sale. Focus on covering your needs first before allocating funds for wants.

Step 5: Create a Realistic Budget

Now comes the key step: creating your budget. Allocate your income to your various expense categories while keeping your goals in mind. Be realistic about your spending habits – if you’ve been spending a significant amount on dining out, don’t suddenly cut it to zero. You are more likely to succeed if you make gradual adjustments.

Step 6: Utilise Budgeting Tools and Apps

In the digital age, there are numerous budgeting tools, apps, and spreadsheets available to help you with the process.  If you would like a super, simple Excel Spreadsheet to get you started, then check out the Money and Marriage Excel Spreadsheet HERE. 

Step 7: Track Your Spending

Consistently monitor your spending to ensure you’re staying within your allocated budget. Review your bank and credit card statements regularly and compare your actual spending to your budgeted amounts. This practise will help you identify any areas where you might be overspending and make necessary adjustments.

Don’t be disheartened if your budget doesn’t go to plan the first month. These things take time. In my experience, it takes about three months to get the budget right.

Step 8: Build in Flexibility

Life is unpredictable, and unexpected expenses can arise at any time. It’s important to build flexibility into your budget to accommodate these situations. Create a separate category for “miscellaneous” to cover unforeseen costs without derailing your entire budget.

Step 9: Stay Disciplined and Avoid Temptation

Sticking to a budget requires discipline and commitment. Avoid temptations to overspend by using strategies like shopping lists, unsubscribing from retail newsletters, and implementing a waiting period for non-essential purchases. 

Visualising your goals can also help you stay on track when faced with spending temptations.

Step 10: Periodically Review and Adjust

Your financial situation and goals can change over time. Regularly review your budget to ensure it still aligns with your objectives. If your income increases, consider allocating more towards savings or investments. If you’ve achieved a goal, be sure to celebrate, then reallocate those funds to your next financial goal.

Step 11: Reward Yourself

While sticking to a budget might require some sacrifices, it’s essential to reward yourself along the way. Small, budget-friendly treats can motivate you to stay on track. Celebrate reaching milestones, whether it’s paying off a credit card or reaching a specific savings goal. No matter how small the goal, remember that you are still making progress and that’s always something to celebrate!

 

Step 12: Seek Professional Advice

If managing your finances becomes overwhelming, don’t hesitate to reach out to me. I am a finance coach and help people to budget, get out of debt, build an emergency fund and set them on the road to financial freedom! You can reach out to me via email at hello@moneyandmarriage.net

In conclusion, creating and sticking to a budget is a complete game changer when you want to take control of your finances. 

A budget requires commitment, self-awareness, and a willingness to make necessary adjustments. But remember that a budget is a flexible tool – it is not set in stone. You can adapt it as you need to. By following these steps and remaining disciplined, you’ll be well on your way to mastering your finances and securing a brighter financial future.

For more information on why Budgeting is Essential, read my blog HERE. 

Find out more about money and Marriage HERE. 

Be sure to reach out to me on Instagram, Twitter or Facebook and let me know how you find budgeting! 

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