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Budgeting for Complete Beginners: Your Friendly Guide to Taking Control of Your Money
Let’s be honest—when most of us hear the word “budget,” we immediately think of restriction, spreadsheets, and saying goodbye to our beloved oat milk lattes. But here’s the truth: budgeting isn’t about depriving yourself of joy. It’s about understanding where your money goes so you can spend more on what genuinely matters to you. Whether you’re saving for a dream holiday, trying to build an emergency fund, or simply want to stop wondering where your salary disappeared to by the 25th of the month, this guide is for you.
Why Budgeting Matters (Especially for Women)
Before we dive into the how, let’s talk about the why. Women face unique financial challenges—from the gender pay gap to career breaks for caregiving—that make financial literacy particularly important. A good budget gives you clarity, reduces money-related anxiety, and puts you in the driver’s seat of your own life. It’s not about penny-pinching; it’s about empowerment.
Think of budgeting as self-care for your future self. Just as you wouldn’t skip skincare or ignore your mental health, tending to your finances is a form of looking after yourself that pays dividends—quite literally.
Getting Started: Know Your Numbers
Step 1: Calculate Your Income
First things first—you need to know exactly how much money you have coming in each month. This sounds obvious, but you’d be surprised how many people only have a vague idea. Add up:
- Your net salary (what actually lands in your bank account after tax, National Insurance, and pension contributions)
- Any side hustle income
- Regular freelance or consulting fees
- Child benefit or other government support you receive
- Any other consistent income sources
If your income varies month to month—which is common for freelancers and those with irregular work—calculate an average based on the past six months, then use the lowest month as your baseline for budgeting purposes. Any extra can go into savings.
Step 2: Track Your Spending
This is where many people feel overwhelmed, but stay with me. You need to know where your money currently goes before you can make any changes. For one full month, track every single expense. That includes the £3.50 coffee, the impulse face mask from Boots, and the subscription you forgot you had.
You can track spending in several ways:
- Banking apps: Most modern banks categorise spending automatically
- Dedicated budgeting apps: Try Money Dashboard, Emma, or Yolt
- The old-fashioned way: A simple notebook or Excel spreadsheet works brilliantly
The goal isn’t to judge yourself—it’s to gather data. You might be surprised by what you discover.
Choosing a Budgeting Method That Works for You
There’s no one-size-fits-all approach to budgeting. The best method is the one you’ll actually stick to. Here are three popular options to consider:
The 50/30/20 Rule
This is perhaps the most beginner-friendly method. You divide your net income into three categories:
- 50% for needs: Rent or mortgage, utilities, groceries, transport, minimum debt payments, and insurance
- 30% for wants: Dining out, entertainment, hobbies, non-essential shopping, and that Pilates membership
- 20% for savings and debt repayment: Emergency fund, pension contributions, investing, and paying off debt beyond minimum payments
If you live in an expensive city like London, you might need to adjust these percentages—perhaps 60/20/20—but the principle remains useful.
The Envelope Method
Perfect for those who struggle with overspending on their debit card. At the start of each month, withdraw cash for your variable expenses (groceries, entertainment, dining out) and divide it into labelled envelopes. When an envelope is empty, that’s it for the month. You can adapt this digitally using apps like Hyperjar or simply by maintaining separate bank accounts for different spending categories.
Zero-Based Budgeting
This method involves giving every single pound a job before the month begins. Income minus expenses (including savings) should equal zero. It’s more intensive but excellent for people who want complete control over their finances or are working towards specific financial goals.
Practical Tips for Budgeting Success
Build an Emergency Fund First
Before you start saving for holidays or investing, aim to build an emergency fund of three to six months’ expenses. This is your financial safety net for unexpected job loss, car repairs, or dental emergencies. Keep this money in an easy-access savings account so you can reach it quickly when needed.
Review Your Subscriptions
The average British household spends around £600 annually on unused subscriptions. Review your bank statements for recurring payments and cancel anything you don’t actively use. That streaming service you haven’t opened in four months? Cancel it. The magazine subscription you’ve lost interest in? Let it go. Redirect that money towards something that genuinely adds value to your life.
Plan for Irregular Expenses
One of the biggest budgeting pitfalls is forgetting about expenses that don’t occur monthly. Car MOT, annual insurance premiums, Christmas presents, and birthday gifts can derail an otherwise solid budget. Create a “sinking fund” by dividing these annual costs by twelve and setting aside that amount each month.
Allow for Some Flexibility
A budget that’s too strict will inevitably fail. Build in a buffer—perhaps £50-100 monthly—for unexpected expenses or spontaneous opportunities. Life happens, and your budget should accommodate that reality rather than pretending it doesn’t.
Common Budgeting Mistakes to Avoid
- Being too restrictive: If your budget doesn’t allow for any enjoyment, you’ll abandon it within weeks
- Forgetting small expenses: Those £2 contact lens solutions and £4 magazines add up
- Not adjusting when circumstances change: Your budget should evolve as your life does
- Setting unrealistic goals: Start small and build momentum rather than attempting dramatic changes overnight
- Ignoring your budget: Review it weekly initially, then monthly once established
The Bottom Line
Budgeting isn’t about restriction—it’s about intention. When you know where your money goes, you can make conscious choices that align with your values and goals. Maybe that means cutting back on takeaways so you can afford that weekend retreat. Perhaps it means finally booking the holiday you’ve been dreaming about without the stress of credit card debt following you home.
Start simple. Track your spending for a month, choose a budgeting method that feels sustainable, and remember that progress beats perfection every time. Your financial confidence will grow with each passing month, and before you know it, you’ll wonder why budgeting ever felt intimidating.
Your future self—the one with savings, options, and peace of mind—will thank you for starting today.
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