How to create a budget and stick to it (2024)

If you're wondering when the squeeze on your finances will ever end, you're not alone! New research in Topcashback's How Britain Spends report reveals almost 17% of those surveyed have nothing left in their current account, or have entered their overdraft, the day before payday. Nearly three quarters say they don’t have their spending fully under control.

Adam Bullock, UK director at TopCashback, says: "Our report brings to light just how thinly salaries are being stretched. In the wake of huge hikes, from grocery bills climbing by 41% to spending 24% more on toiletries, it’s no wonder that millions are having to pay out beyond their means so regularly."

While the economy is showing some improvement as we head into autumn, the cost of living is still high. So, with the season of the big spend fast approaching, how can we keep our finances on track and stick to the budgets?

"Make sure you shop around for the best deals and get the most from loyalty schemes and cashback offers," says Sue Hayward, personal finance expert. "It’s always worth double-checking your bank balance to ensure you’re not shelling out on direct debits for old subscriptions such as streaming channels you don’t use, or auto renewing insurance policies."

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Here's how to get organised

*Know what you spend. Check bank statements and receipts to see exactly how much you are spending each month. Add up all your fixed expenses (like household bills, rent or mortgage payments, credit card payments) and how much you are spending on other essentials such as food, petrol, toiletries, pet food, etc. Make time to sit down and do this - nothing on your bank statement should come as a nasty surprise!

*Know what your income is. This isn't just salary - it could be money from interest on savings, cash gifts, child benefit, rental income or money made from selling things online, for example. Subtract your monthly expenses from your income to see whether you have a shortfall or money over. This will determine your next steps - reining in or making good use of that extra money.

*Make sure you know how to create a budget. If you’re not a spreadsheet kind of person, try apps that help you budget such as Moneydashboard and Emma. These apps connect to your bank accounts so you can see everything in one place. The digital-only banks are also on the money when it comes to helping you track spending and budget. Check out Starling Bank and Monzo.

You can also check your spending and make a monthly or annual budget plan with this handy budget calculator from MoneyHelper.

We also like the 50:20:30 rule to help you divide up your income and spend wisely.

• Allow up to 50% of your income for things you need.
• Leave 30% of your income for things you want.
• Commit 20% of your income to savings and repaying any debts.

*Focus on paying off debts. Nobody needs to be paying interest on credit cards. If you are, set up a 0% balance transfer card to tackle the debt. Put your debts in priority order and decide how you are going to tackle them. For free help on this contact stepchange.org.

If you think it's achievable on your current spending and saving regime, think about overpaying your mortgage to clear the balance more quickly.

*Save regularly – that way your money’s earning interest. Check out the best buys for high street savings accounts and ISAs at comparison websites such as Moneyfacts and Moneysupermarket.

*Keep an eye on your credit scores and check out ways to improve your rating. It’s free at all the credit reference agencies now - Equifax, Experian and TransUnion (previously Callcredit). Think of your credit score as your financial CV - something that lenders look at before they let you borrow - so you want it to look as impressive as possible.

*Ditch hefty overdraft fees or unused packaged bank accounts (where you're paying a fixed amount every month for services you may have forgotten you have access to, such as mobile phone insurance or car breakdown cover). There are plenty of ways to avoid expensive charges.

*Get in the habit of analysing outgoings and comparing prices as a matter of course, whether you’re buying new trainers or switching insurer. Remember it's your money, don't waste it!