How to build a budget: a step-by-step guide

A budget is a realistic plan for your income and outgoings that helps you avoid running out of money or falling into debt. Build one in three steps: work out your after-tax income, split spending into essentials/non-essentials/savings, then track it consistently. Popular strategies include jam-jar budgeting, the 50:30:20 rule (needs/wants/savings), and "pay yourself first" - pairing any of them with apps like Monzo, Emma or Plum.

What is a budget, and why do I need one?

A budget is a realistic plan for how money comes in and goes out, based on your actual income and spending. It helps you stay within your means, avoid debt, and spot forgotten subscriptions or unnecessary spending. Setting aside an hour, distraction-free, is enough to get it right.

How do I build a budget in three steps?

1. Calculate your after-tax (net) income.
2. Split your spending into essentials (like rent, bills, groceries), non-essentials (subscriptions and meals out) and savings (ISAs, pensions).
3. Set realistic short-term and long-term financial goals, tracking your progress and adjusting your plan when unexpected costs come up.

What’s the best budgeting app for my goals?

It depends on your priority: Monzo suits full digital banking with built-in budgeting; Plum automates savings using AI; Chip maximises interest on what you save; Emma gives visibility across all your accounts; Snoop flags wasted spending and subscriptions.

Join Boring Money for free to read the full guide, including more on:

• What budgeting is
• How to build your budgeting plan from scratch
• Our top tips on how to budget to meet your financial goals
• Compare saving and budgeting app features and costs to find your best fit.