A personal budget can have a big impact on your life. It doesn’t matter how you create a personal budget (excel spreadsheet, notebook etc) but you do need some way to determine where your money is going each month. The trick is to find a way to track your finance that works for you. The following broad steps can help you create a budget.


Step 1: Set your goals


Before you start identifying all your incomings and outgoings, make a list of all the financial goals you want to achieve, for both the short term and long term. These goals aren’t set in stone but it will help if you know your priorities before you start a budget. Knowing the goals you want to achieve may make it easier to be honest with yourself about that extra daily coffee.

Short term goals should take no longer than a year to achieve. Long term goals, such as saving for retirement, the perfect home or children, may take many years to achieve.



Step 2: Note your net income


Identify the amount of money you have coming in. Make sure to use your net income (your take home pay). It is important to note how constant this income is and what might cause it to vary on a monthly basis.

If you have freelance or part time roles it is important not to overestimate what your monthly income is. I would suggest using a low income month as the amount to use when setting up a personal budget. Any additional income in a month can be used to grow savings faster.

It is also good to think about other potential sources of income. Can you convert a hobby or talent into a way to supplement your income?



Step 3: Track all your spending


It is important to create a detailed account of all places you are spending money. The more detail that is used the easier it will be to identify where changes can be made.

Start with printing out your bank statements and credit card statements. Go through these to identify and list

  1. All fixed expenses: regular monthly bills such as rent, car payments and utilities. It will be difficult to cut back on these but understanding how much of your income is assigned to these is important.
  2. List all variable expenses: these may change from month to month such as groceries, mobile phone and entertainment. Here you have opportunities to cut back.


Step 4: Set out your savings objectives


Make sure you note all the areas where you currently save and based on your goals you set out, determine the areas you want to save for. Don’t be too concerned about the value you will be saving on a monthly basis. This will be based on the amount of money remaining after paying for all your expenses. The savings categories should be detailed. This will help you decide on what has to be sacrificed or what is essential.

Savings should also include items such as car insurance and other once off lump sum payments. This will help you manage your money without unexpected shocks.


Step 5: Make a plan and adjust habits


Use the variable and fixed expenses you compiled to help you get a sense of what you’ll spend in the coming months. This will help you predict how much you have to budget for. Your past few months spending habits will guide you when trying to predict variable expenses.

Once you’ve done all this, you have what you need to complete your budget.

You now have all your income and spending details. This helps you see where you have money left over each month or if there is too little left over, where you can cut back.

The money left over can be put towards your goals and savings. If there is too little left over, you can either postpone certain goals or reduce some spend (small savings can add up to a lot. Don’t overlook the little things). Such decisions come with big trade-offs, so make sure you carefully weigh your options. You need to be able to commit to the budget.


Step 6: Keep checking in


Review, review, review. Very little is set in stone. Income may increase. Goals change. Control over spending.

Keep checking and readjusting your budget to suit your current situation. Follow the steps above and find a routine that suits you.

If you want any financial help please contact me. No obligation, just simple explanations.





Take control of your finances, make your money work smarter, harder and go further. Put the right steps in place to meet your financial objectives no matter what stage of your life you are in


Take control of your finances, make your money work smarter, harder and go further. Put the right steps in place to meet your financial objectives no matter what stage of your life you are in