How you can save money and budget

A budget can be one of the most effective financial tools if used correctly; however, setting up a budget can be a long, daunting process. Budgeting can be difficult as it involves being very thorough and honest while you write down all the details of your personal expenditure. On the flip side of the coin, if you persist and you come out of the other side with an effective budget, it can help you easily monitor your finances and save you money.

Budget and Saving


When you look at setting up a budget you should first set yourself an overall aim of what you want to achieve. Your aim should be measurable so that you can check how close you are to hitting your target. It should also be realistic, setting yourself an unrealistic target can be incredibly demoralising. An example of a saving money target could be that you wish to save £200 every month for a year.

Set up

Once you have your aim, then its time to start setting up your budget. To do this you need to note down all of your expenditure next to your income, from my personal experience, I would advise doing this on a monthly basis at the beginning of the month. Try to remember to include everything, which comes back to my point earlier about being thorough. Once you have noted down your expenditure and your monthly income, then you can take your expenditure away from your income, which will leave you with what I like to call flexible cash.

Cut Expenditure

Once you have your budget in place the best way to improve your level of flexible cash (and as a result save money) is of course to cut down on your expenditure. You can do this using a number of methods, but the first thing you need to do is look at the expenditure on your budget to see if there’s anything that stands out. Can you see any payments that look like they’re far too high? If so, then they are your first point of action. If not then here’s a few money saving tips for things that should be included in your budget:

Food shopping – When you go out for your weekly or daily food shop, before you go out make a list of what you need and try to stick to the list! By doing this you can try and cut out on the expensive impulse purchases that just bump up your bill
Credit Cards – If you use your credit cards regularly you can check to see if you are paying more interest than you should be on them. If you are, then why not transfer your credit card balances using a balance transfer credit card. Balance transfer credit cards normally come with a typical interest free period, normally 12 months, so by doing this, you can save yourself a lot of money in interest payments
Your bills – Have you checked recently to see if you can save money on your household bills? For many of us our answer is no, but it should be yes. Using price comparison websites on a regular basis you can check to see if you are paying too much money for various necessities, this could include your internet, phone and your utility bills. Using price comparison sites can save you time and money because they do the hard work so you don’t have to.
Car fuel – Do you spend too much on petrol for your car? If you do then you could look at alternatives to help save you money. One alternative could be biking to work, many people do it and it saves them money and helps the environment at the same time. You could also use public transport wherever possible to help save you some money.

Flexible Cash

With your level of flexible cash, whether it is large or small, it’s up to you what you do with it. I tend to split the cash up into three categories, emergency funds, savings and flexi. You could split it up evenly and place a third in each, but depending on your circumstances you can alter this accordingly. For example if your main aim is to save, then you can place half of the amount in a cash ISA savings account, and split up the remaining half into emergency and flexi, it’s totally up to you.

Try and stick to your budget to the best of your ability. You will have times when something pops up that isn’t expected, e.g. something goes wrong with your car, and this is where your emergency fund can come into action.