How to: Create a Budget

Step number one to being financially responsible is creating a budget.

Budgets vary from one person to the next of course, as everyone has different outgoings. It's UKFrugalFinance's belief that your budget should be kept in a simple spreadsheet, especially if you are just starting out. Many people have created complex and fancy spreadsheet templates, but mine, mine is simple. The excel skills needed to use my template are basic, so don't be scared.

My suggestion is to have a look at it whilst reading the below, and make some small amendments to your liking. So, click here for the downloadable link. This link is to a google sheet, you can use as is if you have gmail, or download into excel or other software (libreoffice has a free version of excel). Go to File: Download as... to download.

You'l notice column B looks a tad strange, its simply the Month in YYMM format, so February 2015 would be 1502, you get it. Each month you should take a peek at your budget. 

Instructions on what to do in each column are below:

Income: You guessed it, plug in your income or budget for each month. I always suggest to my friends and family to go based on your previous pay-check, so if you are payed at the end of August, use this money for your September budget!

Rent / Mortgage: Input how much you pay for this on a monthly basis.

Gas + Electric + Water: You're getting the hang of it. Add how much you pay for these 3 bills (or adjust to other bills) and that's it.

Council Tax, Internet, Mobile phone: I crack in here my monthly payments, you can always combine these with other essentials if they aren't already covered.

DD's (e.g. Gym, Insurance, Spotify): Any direct debits not already covered should be entered here. I suggest making sure you utilise everything you're paying for, and if not, go about cancelling.

Bills Total: This totals your bills - you can use this to track how much you cut out over time, and is also used in later columns.

Food: £30 a week should easily feed 1 adult for the week, especially if you shop at Lidl or Aldi. Estimate your weekly spend and times it by 4.33 to get your monthly budget. Try seeing if you can make a saving here.

Transport: Again, this one is relatively self explanatory. Add your monthly bus/train/car (petrol,  maintenance, insurance, etc) here.

Savings Pots 1, 2 and 3: Everyone saves differently. Let's say you're saving for a holiday, a house, and for the long term in an S&S ISA. Wherever you decide or currently stack up your savings, split out how much is currently in the pots, and however much you decide to add each month, track the total. Each month, transfer the amount you want to save into the accounts/account you hold, and split between the 3 pots as you wish. You can of course add more or delete soe, but you will need to ammend the formula in the "Total Savings" column. The budget already in the sheet for example, saved £50 into pot 1, and £25 into pot 2 and 3 every month.

Saved This Month: Simply adds up how much you saved in each month.

Total Savings: Shows how much you have saved in total.

Social / Fun Money: Finally, the good bit! They way this budget sheet works is anything left over from your bills, food, transport and savings - is yours to spend as you wish. You can adjust this up or down by decreasing/increasing the amount you save each month. If you are a parent or have animals, within here you may will need to split how much you want to spend on them.

There's a second tab with a pivot table if you'd like to experiment more, but this is not needed. 

That's it, just make sure you update this each month, which takes no more than 10 mins, and you're off to a great start to financial responsibility =)