Good morning venturous, kind people. Let’s talk about how and what I’m personally using for budget planning and why is important to have a robust budget planner. Again, this is from my own point of view, experience and circumstances, so please feel free to use it or not.
The purpose of this guide is to give you some insights and tips about budget planning. Includes also a free budget planner (is a Google sheet format), which analyses your finances to help you manage and control your cash.
Legally, I’m obliged to ask you to read the disclaimer and to reiterate that all information found here, are for informational, entertainment or educational purposes only and should not be construed as personal financial/investment advice.
Table of Contents
What Is a Budget Plan?
A budget plan is your go-to tool for analysing your finances, your incomes and outgoings and should answer two essential questions: what can I actually afford and if I’ve spend more than I’ve earned.
Having a clear image of your spending is vital as it can give you an accurate idea of the size and scale of your potential overspending problem. Major overspending can lead to a debt spiral and severe financial problems.
Once we answer the question of spending, we can our goals which means that we can adjust and prioritise our spending to stick within our means. As, we’ve discussed in the financial wellbeing piece, sticking to a budget is the tricky bit. Creating and using an efficient budget planner is the easy step and everyone can do it.
What You’ll Need Before Filling The Budget Planner
Before we jump in and start filling the free budget planner spreadsheet, you will need the following:
- Statements and receipts: Ideally you will look at the last 6 months bank statements and receipts. Try to rely on accuracy when comes to budgeting. Please use exact figures instead of estimates as the success stands in your honesty, accuracy and consistency of filling in your budget plan.
- Purpose of your budget: It is important to fill it in for all your household, not just yourself or just the partner. Finances often cant be separated, in which case, I strongly recommend having an honest discussion with your other half and do it together.
- Differentiate the debt of spending: In the budget planner you will find a section for loans and credit card which has the purpose of illustrate your repaying your existing credit card and loan debt. For the credit card, if you are paying it off in full at the end of each month, that amount should go against the item you are spending it on.
- Pensions or investment contributions: If you contribute additional to a pension fund or an ISA (which isn’t coming out of your salary through payroll payment) then make sure to add it as expense.
- One time sums: Probably, these are the most overseen expenses if you are looking at you’re using the only last 3 months bank statements or if you are using the basic expense calculator within your banking account. In this category can be anything from holidays, special birthday treats or even an expensive hobby like collector’s car or motorcycles.
My Budget Planner
For my personal budget planning, I’m using the same spreadsheet you can find below.
Link: Venturous Budget Planner
Again, are so many others out there, either are just simple spreadsheets (either Excel or Google Sheets) or either are paid or free Android/Apple Apps. From my experience, just use what you feel comfortable with and you can always access with 1-click as the first step to take when comes finding a resolution to any financial problems is to understand where you are and if you are sticking within your earnings.
Avoid the “debt spiral”. A debt spiral occurs when your debt keeps growing, and you find yourself unable to repay it. This situation arises when you continually spend more money than you earn and rely on borrowing to meet your expenses. In such a scenario, you’re at risk of falling into a cycle of mounting debt that becomes increasingly challenging to escape from.
I’m Overspending. Take These Steps To Reduce Your Outgoings
Most of us have been overspending at some point and is quite difficult to cut it down when you don’t have a solid budget plan in place. Here are some steps to reduce your overspending:
- Switch your go-to suppliers – Keep your lifestyle but try to pay less for the same things, such as broadband, supermarket shopping’s, childcare, phone, internet and more. A really good piece about this topic can be found at Money Saving Expert – Money Makeover.
- Cut unnecessary expenses – If the first step isn’t enough, then you need to spend less by cutting unnecessary bills. Ask yourself, do I really need this at this time? Cutting your weekly eating out or daily Costa coffee can have a massive impact on your budget.
- Sell things you don’t actually use – If sometimes diminishing your expenses isn’t enough, you can opt in to increase temporarily your income to cope with a stressful period. For example, if you have a lot of assets you can sell them to cover a debt or to get your savings back together. If you didn’t use it more than 3 times in the last 45 days, you don’t actually need it.
Top Tip: Learn About Piggy Banking Technique
What is the Piggy Banking technique? It is a straightforward method to automate your spending and gain a clear grasp of your available funds. Here’s how it works in a more refined way:
Step 1: Define Your Spending Categories
To maintain financial balance—ensuring you don’t spend beyond your means—it’s essential to determine how much you can allocate to different aspects of your life.
Once you’ve established these figures, categorize your major areas of spending. These could encompass items like vacations, wedding savings, holiday expenses, clothing, birthdays, hobbies, or any recurring financial commitments. For those who are self-employed, it’s critical to allocate funds for taxes.
Step 2: Organize Your “Piggies”
Now that you’ve budgeted for various spending categories, the objective is to streamline your financial tracking. While in the past, multiple bank accounts might have been necessary (think of them as distinct piggybanks), modern banking solutions offer more convenient options. Many current accounts allow you to create virtual “pots” that can be managed through a single platform, either via an app or online. This eliminates the need for numerous accounts with different providers.
Step 3: Set Up Direct Debits to Fund Your Categories
With your money allocated to different categories—whether through separate bank accounts or digital “pots”—it’s time to fund each of these segments systematically. Establish direct debits to transfer the appropriate amount of money from your primary account to each category every month.
For instance, if you’ve earmarked £800 annually for Christmas expenditures (a common budget for UK families), you would configure a standing order to move £67 into your Christmas fund each month. This consistent approach allows you to accumulate funds steadily throughout the year.
Pro Tip: Schedule these transfers for a day or two after you receive your income, rather than on the same day. This precaution provides a buffer in case of any payment-related issues.
If you are sticking to your budget and using the piggy bank method, you are ahead of majority of people. Keep it simple, put aside all the cash you need for your essentials and bills and if anything is left over, than you can spend it on non essential things. Spend what you can afford and minimise the borrowing.
And revise your budget planning every quarter and adjust it accordingly. Always keep an eye for alternatives, especially when comes to providers and suppliers and use direct debits to your advantage.