Table of contents

A budget isn’t just a spreadsheet – it’s your money plan.

It helps you make the most of what you earn, stay in control of bills and feel more confident about where your money goes every month.

This guide breaks budgeting into three simple steps:

  • Knowing what’s coming in.
  • Tracking what’s going out.
  • Adjusting your budget to make it work for you.

Step 1: Understand your income

It’s easy to overlook where all your money comes from – wages, pensions, benefits or side income.

List each income source separately to clearly see how much you’ll receive and when.

Check for extra income you might be missing. Many people qualify for benefits or grants without realising it. A small boost can make a big difference to your household budget.

Helpful tools and resources

  • Benefits Calculator – Use our benefits calculator to check what benefits you could be receiving.
  • Turn2us – A national charity Turn2us help people access benefits, charitable grants and other forms of support.
  • BudgetSmart – Our free tool BudgetSmart helps you explore discounts and the latest money-saving tips.

Step 2: Track your spending

Know where your money really goes. Your budget should include both essential costs (rent, utilities, transport, food) and lifestyle choices (hobbies, subscriptions, treats).

Tracking your spending helps you find small savings that add up.

Did you know? If you live alone, you can usually get a 25% discount on council tax. For example, if your annual bill is £1,686, this could save you around £421 a year.

Struggling with bills? Many utility providers offer hardship funds or flexible payment plans. Check BudgetSmart or contact your supplier (like Anglian Water, Severn Trent, or Northumbrian Water) to see what support is available.

Step 3: Build your budget

Start with a full picture of your finances. Gather your recent bank statements, credit card bills or check your banking app to see what’s really coming in and going out.

There’s no single “right” way to budget – the best plan is the one you’ll use.

You can start with this simple format.

Example budget breakdown

Money Coming In

My Monthly Income (Money Coming In)

Amount (£)

Work (personal)

2,090

Work (partner)

2,150

Child Benefit

110

Total Expected In

4,350

Money Going Out

My Monthly Costs (Money Going Out)

Amount (£)

Rent

900

Council Tax

180

Gas and Electric

140

Water

30

Mobiles

90

Car Finance

240

Petrol

120                                  

Public Transport

60

Food

490

Toiletries

50

Total Expected To Go Out  

2,410

What’s Left Over

My Money Leftover

Amount (£)

My Total Money Incoming

4,350

My Total Money Outgoing

2,410

Total Money Leftover
(Your Total Income – Your Total Outgoings)

1,940

Money Left Over

If the amount you’re left with feels small – or even negative – don’t panic.

The benefit of budgeting is visibility: you can see where your money goes and find opportunities to save or get support.

Step 4: Keep it working

Budgets aren’t “set and forget.”
Review yours every few weeks to make sure it still fits your lifestyle, especially if your income or bills change.

Quick budget maintenance tips:

  • Use BudgetSmart to track changes and find discounts.
  • Set a monthly calendar reminder to check your spending.
  • If you share finances, review together to stay aligned.

Need help making your budget work?

If you’re finding it hard to stick to your budget or you’re struggling with debt, you’re not alone – and support is available.

Get debt help online or call 0800 316 1833 for confidential advice.

Small steps today can create long-term financial stability tomorrow.