A budget is a simple plan that helps you look after your money. It shows how much money you have, what you need to spend it on, and how much you can save. A budget helps you make sure you don’t run out of money before the end of the week or month.

Think of it like a money map—it shows you where your money is going.

How to make a budget

To make a budget:

  1. Look at the money you’ve got coming in and add together all your monthly income including:
  2. Wages
  3. Benefits
  4. Pensions
  5. Housekeeping money
  6. Child maintenance payments
  • Understand your spending and make a list of all your monthly costs, including:
  • Rent/Mortgage
  • Household bills
  • Insurance
  • Subscriptions
  • Medicines
  • Childcare
  • Food
  • Travel

You should also include one-off payments like:

  • Christmas
  • Holidays
  • Repairs
  • Vet’s bills

Not all income and spending is monthly. To understand how to calculate these by month, follow the steps below:

  • One-off payments: divide the yearly or one-time cost by 12 (the months in a year)
  • Weekly or 4-weekly payments: multiply the weekly figure by 52 (the weeks in a year), and then divide by 12 (the months in a year)
  • Annual salary: take the yearly total for your salary and divide by 12 (the months in the year)
  • Council tax (usually billed across 10 months of the year): multiply the monthly payment by 10, and then divide by 12
  • Work out how much is left to help you know if there is anything extra, by:
  • Adding all your income together
  • Adding all your spending together
  • Subtracting your total spending from your total income

Any extra money left is called a ‘budget surplus’. If you have more money going out than coming in, you have a ‘budget deficit’.

How to manage your budget:

A budget helps you feel in control. It’s not about saying “no” to fun—it’s about making sure you can enjoy life without running out of money.

Three important tips to help you to manage your budget:

  1. Needs come first – Pay for important things like food, rent, and bills before spending on extras
  2. Set limits – Give yourself a set amount for fun stuff so you don’t overspend.
  3. Check often – Look at your budget every week to see how you’re doing.

To make budgeting easier,

  • Use a notebook or app – to track your money
  • Save a little – try to save a small amount each week. Even £1 a week adds up
  • Plan ahead – if you know an event is coming, save for it early.

Find out more about budgeting