How to Create a Realistic Budget You’ll Actually Stick To.

15 May

Let’s be honest—“budget” is one of those words that makes most people groan. Maybe you've tried before, created a colourful spreadsheet, even set spending limits. And then... you never opened it again.

The truth is, budgeting isn’t about deprivation or guilt-tripping yourself. It’s about understanding your money, so you can use it on the things that actually matter to you. Whether your goal is to pay off debt, save for a home, or just stop wondering where your money goes, it all starts with a budget you can live with—not just one that looks good on paper.

Here’s how to create a realistic budget you’ll actually stick to.

Step 1: Know What’s Coming In

Before you start slicing up your spending, you need to know what you’re working with.

Look at your take-home pay (after tax and National Insurance).
Include any side hustle income, benefits, or irregular earnings like freelance jobs.
If your income changes month to month, calculate an average based on the last 3–6 months.

📌 Tip: Focus on reliable income. Don’t count on bonuses, tax refunds, or next week’s lottery win.

Step 2: Track Where It’s Going

This is where most people fall short—but it’s the most eye-opening step. Go through your last 1–2 months of bank statements and categorise your spending.

Key spending areas in the UK might include:

Rent or mortgage
Council Tax
Utilities (gas, electricity, water)
Transport (petrol, train/bus passes)
Groceries
Subscriptions (Spotify, Netflix, Amazon Prime…)
Takeaways, nights out, impulse buys

📌 Tip: Apps like Moneyhub, Emma, or your own online banking app can help categorise spending automatically.

Step 3: Set Spending Limits That Fit Your Life

Now that you know your income and where it’s going, you can start planning how to spend intentionally.

Use a simple budgeting structure like:

50% Needs – housing, bills, groceries, transport
30% Wants – hobbies, dining out, subscriptions
20% Savings/Debt Repayment – emergency fund, debt overpayments, savings goals

But don’t stress if your percentages aren’t perfect. The key is to make sure your total expenses don’t exceed your income—and ideally, to give every pound a job.

Step 4: Make Room for the Unexpected

Flat tyres. Forgotten birthdays. NHS prescriptions. Life happens—and your budget should be able to roll with it.

Create a "buffer" category in your monthly budget, even if it's just £30–£50. This gives you breathing room without blowing your whole plan when something small goes wrong.

Step 5: Use Tools That Make It Easier

Budgeting doesn’t have to live in a spreadsheet. There are lots of UK-friendly tools that can help:

Money Dashboard – free and great for visual budgeting
YNAB (You Need A Budget) – a paid tool focused on zero-based budgeting
Snoop – clever, AI-powered insights into spending
Good old-fashioned pen & paper – don’t knock it!

Step 6: Review and Adjust Regularly

Your budget isn’t a fixed contract. It should grow and change with you.

Set a reminder once a month to:

Review how you did last month
Tweak categories if needed
Reallocate unspent funds or cover overspending

Budgeting is like exercising—you won’t be perfect every time, but the more consistently you do it, the stronger your habits become.

Step 7: Make It Motivating, Not Miserable

A good budget supports your life—it doesn’t make it smaller. Be honest about what you value, and give yourself room to enjoy your money (yes, even on a budget).

Saving for a goal? Put a picture on your fridge. Trying to cut back on spending? Celebrate small wins—like making it a week without takeaway.

Final Thoughts

A budget you’ll actually stick to isn’t about control—it’s about freedom. Freedom to make decisions, to plan ahead, and to stop feeling like your money’s vanishing into thin air.

Start small. Be flexible. And most importantly—keep going.

Joshua Pyrah