7 Essential Tips for Creating a Budget

7 Essential Tips for Creating a Budget

In my May monthly goals post, I talked about wanting to start (and stick to) a monthly budget. Full disclosure, recently my relationship with money has become terrible. It’s gotten so bad that I put a spending ban on myself for Lent and couldn’t even stick to it for 2 weeks. My life is literally morphing into Confessions of a Shopaholic.

Recently, I have started making excuses for my spending that are not good enough, and I’m sure some of you are the same. When starting my blog I thought that I would need to constantly be buying new beauty and skincare products in order to make my blog popular, but in reality, popularity isn’t what I’m doing this for. So I was mostly just spending money for the sake of spending.

What prompted me into wanting to get serious with money was twofold: I know that I am wasting a lot of money, and when making purchases I don’t get any joy out of that purchase because I don’t feel like I deserve it. That’s when I knew that something needed to change! So recently, I have imposed a budget on myself, and I have been sticking to it quite well!

Throughout this process, I have gathered a lot of useful tips on how to make budgeting work for you. So, read on to find out my essential tips for creating a budget!

1. Motivate Yourself

Honestly, you are going to get nowhere in this budgeting journey if you’re not in the right headspace. Budgeting and finance are a complete drag, I know. No one really wants to be checking through their bank statements meticulously and worrying about every purchase they make. I mean life is so much more fun when you just ignore your latest bank statement, right?


You’re ignoring those bank statements because you know how awful it will feel when you actually check them! Imagine how amazing it would be to know you are in the clear financially. And, how amazing it will be to actually appreciate the purchases you do make.

One of the things that actually got me excited to start this journey was watching The Financial Diet’s videos. And when I say watching, I obviously mean binge watching. Chelsea and Lauren are so straight forward when it comes to money and they have a lot of sound advice. Here is a couple of videos that helped me out the most:

How to Save Money


Before watching these videos, I could never imagine actually getting motivated to sort out my finances. But, somehow it happened. And, if it worked for me, I’m hoping it will work for you guys too!


2. Set Some Goals

I believe that goals should come in two parts: the end goal, and the smaller goals you’re going to set to help yourself get there.

I’m still a student and I will be going into my Final Year come September, which means that graduation is looming. For me, as it is for many, this is a very scary prospect. So recently, I’ve been thinking really hard about the future and what I want to do after I graduate. My end goal is to move to London, and to do this, I would like to have decent savings to help along the way.

Thats the current end goal, but how am I going to get there?

I think It’s great to plan each goal out within the time frame that you have. But try not to be too strict with this timeframe, because there will always be times when you have to have to spend a little more than you would have liked (ie. Course books).

So my first goal is to get out of my overdraft, and stay out of it before my student loan comes in in September. This in itself is quite a large goal. And incase you’re not from the UK, or you don’t even have a student overdraft, while you are a student, and even for a couple of years afterwards, you don’t have to pay interest on this overdraft. It is very useful, but I hate being in it. Unlike some, I don’t view my overdraft as “free money”, I view it as a safety net, but also a bad habit waiting to happen.

So, with these goals in mind, I’m hoping to move forward and gradually create better spending habits, and build up my savings before this time next year.

3. Go through your bank statements with a fine tooth comb.

This is the worst part. But once you’ve done it, a weight will be lifted off your shoulders. I suggest printing off your last month’s bank statement, or even a couple of months, getting some coloured pens and splitting your spending into categories. These categories can be things like: Coffee to-go, Food Shopping, Clothes, Makeup, Travel, etc.

The total numbers will be scary in some parts, but this is meant to scare you a little. Because once you actually see the tangible numbers all added up on a piece of paper, you’ll realise what was worth it, and what wasn’t.

After you’ve completed this step, you can then start thinking about what you can cut out of your life, (goodbye take-aways), and what you know you want to keep. It’s from here that you can start to understand your cashflow i.e. what money you have to spend each month on things like rent and bills, and what extra money you have to spend and put in your savings.

I would actually recommend doing this every month so you can keep track of your progress. As the months go on, hopefully you will start to see the improvements in your spending habits. Then, instead of this being a daunting task, it will be a place where you can reflect on your achievement and you can feel proud of the progress you’ve made.

One of the things that has helped me massively with this is signing up to an online-only bank. I’m currently with Monzo, and their app is great for setting up a budget!


4. Always Over-estimate

When creating your budget, there will always be figures that vary every month. Take for example: Food Shopping. This is a figure that is unlikely to ever be exactly the same. You can track how much you spend on food shopping to get an average, but I prefer to over-estimate. This means that I will (hopefully) never be going over the amount I have budgeted for that category. On the reverse of that, sometimes I will even be going under, then you have more money for either your savings, or your social life.

So basically, the more you over-estimate with your budget, the more likely you are to stay in the clear!


5. Keep Receipts

I think this one is pretty self-explanatory. Not all of our spending is done on our cards, so if you spend some cash, make sure you get the receipts so that you can take that spending into account within your budget.

Warning: if you don’t keep on top of sorting out your receipts, your handbag will quickly become overwhelmed by them!


6. Stick to A Strict Saving Pattern

Figure out how much you can afford to put into savings each month, and stick to it. The easiest way to do this is to have the money go straight in your savings account before you have a chance to even see it. This way you won’t be tempted to spend! Also, it may be a good idea to put your savings account with a completely different bank to your current account.

If you end up having a bit left over from your budget last month, don’t be too tempted to put it all into savings. Although splitting your finances into a monthly budget is useful in terms of keeping track, you still need to think of your finances as fluid. Some months you will spend more, some months you’ll spend less – it’s all part of the bigger picture.


7. Keep an Emergency Fund

So this is something I haven’t done before, but I am determined to start doing. In the past, my savings have been my emergency fund. Which created a really bad habit where I feel like I can dip into my savings whenever I like. So for my emergency fund, I’m planning to put a set amount in each month, and then only use it if I really need to. Not just to top up my spending.

By having an emergency fund, your savings can be saved for the long term.


If you have any great budgeting tips I would really love to know down in the comments! These are just the things that have helped me, but everyone is different. I would love to know if any of these have helped you. Or if there are any websites and apps that you have loved when it comes to creating a budget!



    • Alice Cox
      June 5, 2017 / 4:35 pm

      Thank you so much! I’m glad you found the tips helpful 🙂

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