How To Create a Great Budget

Wednesday, January 6, 2021

Building a better money habit can be a slog! But the relief and joy you feel when it is done can’t be rivaled.

Like most people, you probably have some idea what comes in, what goes out, and when. But a budget on a spreadsheet can really help you make a difference to your money.

Here are some steps that you can take to help yourself create a great budget.

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The Net

You have to know what is coming in. It is really to overestimate what you have coming in and going out if you don’t keep track of your income. If you are a contractor or a freelancer, you most likely don’t have a regular set amount that you earn a month. This can make it a little more difficult.

Deduct your pension, social security/nation insurances, and anything else that comes directly out of your pay.

The final total here is called your net income.


Net income is your profits or income after all of the deductions are taken out.

Gross income is the total amount you earn before taxes and deductions. 


This could be your Netflix subscription, it might be your regular Friday night takeaway, and it will cover your mortgage too.

Your fixed expenses are things that have to be paid no matter what. These expenses are usually also things you can’t really reduce. Most often, these bills will be a regular amount and be taken at the same time each month or year if you pay quarterly.

Having a final amount will mean you can use tools like a simple mortgage calculator or comparison websites more easily.
Break down Further

You can break down the higher costs into even more information-packed notes. For example, you may have to pay for your car, but you also need regular maintenance, gas, parking costs, and more. So break down each item into everything that goes into the total, and you might find there are some expenses you hadn’t accounted for.

Once you have a confirmed amount that a bill is going to cost you, you will be able to use a comparison website or calculator to work out if you could be getting a better deal. Comparison websites are useful for looking at the potential savings or perks you can get if you swap to another provider.

Here are some of the regular bills that you can see if you can spend less.

Pet insurance

Home insurance

Gas & Electric


Mobile phone provider

Car insurance

Home phone and internet providers


Make sure that you read all of the terms and conditions so that you understand the contract and the terms of your switch.
Financial Goals

Once you have all of the information written down, you have some firm figures to work with. Short term goals can be undertaken and achieved in around a year. These should be things like starting an emergency fund and starting to put small amounts into it and setting a small savings goal and meeting it.

Your longer-term goals will be things like setting up a retirement plan, saving for a mortgage, cutting out a specific expense.

Here are some of the goals that you can consider:

Pay off any debts

Saving for retirement

Having an education fund, or a small support fund for your children


Emergency fund

If you find that you need to up your income to research your financial goals more easily, then you could consider finding extra work online. Think about the skills that you have, and perhaps they can be channeled into another income stream.

Once you have all of the information, you can begin to plan better. You will have a more accurate history of where you spend your money outside of your regular required bills. Some of us don’t pay too much attention to the smaller amounts that we spend, where we spend it, and if we even get a benefit.

When you have a budget in place, it can be very helpful in encouraging you to change your spending habits. Many of us buy things we don’t need to cheer ourselves up, or if we aren’t keeping a good inventory on what we already have.

A good rule and habit of implementing, is trying to wait before you make any purchases. If you need a new outfit, go through your closet and find things you haven’t worn in a while and wear that. For big-ticket items, see if you can wait 30 days before buying them. This will give you time to decide if you really need them, or you just wanted them at the moment. Putting an end to impulse buying is an important part of tackling your finances.
Track it

Once you have your budget in place, you can spend the first few months working out if it is realistic or if you are able to truthfully stick to the spending limits you have placed yourself under.

Check your accounts against your budget each week, and you can see if there is room for improvement.

It might be that the initial budget was too strict or that you needed to have an implementation strategy that gradually reduced your outgoings over the space of a few months to help you get used to it.
What if it doesn’t add up?

There are times when your outgoings and income just don’t add up. This can be challenging to see on paper and will mean that you need to make more significant adjustments and a greater commitment to your spending.

It is also highly likely that you will need to discuss your debts with a professional who can help make sure that you are only paying what you can afford.

Here is an excellent guide to working through debt: 44 tips on paying off your debts

Reviewing your budget regularly will make sure that you can track any changes, and you will be more aware and prepared for any upcoming expenses.

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