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    Home • Money guides

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

    Written by Boring Money

    29 Dec, 2023

    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.

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    Join Boring Money for free today to learn more about how to budget and the practical steps you can take to start planning for your short and long-term goals. Registering should take you less than a minute, so it's quick and painless.

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    Important stuffHolly and the team have worked in the finance industry for many years but we are not regulated to give you personal financial advice. For every story on this website about a good investment, or something which went up by 10% or made someone £200, we could also share a story about a bad investment, something which fell in value or lost someone £200. We aim to provide general information and pointers – and btw we are totally agnostic about which providers you might pick – but if you have complex affairs, want personalised advice or need specific recommendations, please look at advice pages and see if regulated digital or traditional financial advice would be the best solution for your needs. Boring Money Ltd is a limited company registered in England and Wales under registration number 09459832 and we have our registered office at 37 Lombard Street, London, EC3V 9BQ.
    InformationHistorically, money invested for more than five years grows more than cash savings. Remember that investments can also fall, so you might not get all of your money back. Tax treatment depends on individual circumstances and may change.
    Boring Money Ltd is a limited company registered in England and Wales under registration number 09459832 and we have our registered office at 37 Lombard Street, London, EC3V 9BQ.