How to Budget: A Simple UK Guide

Budgeting does not have to be complicated. The 50/30/20 rule is a great starting point: allocate 50% of after-tax income to needs (rent, bills, food, transport), 30% to wants (dining out, entertainment, subscriptions), and 20% to savings and debt repayment.

Step 1: Calculate your take-home pay after tax and NI. Step 2: List your fixed costs (rent/mortgage, utilities, insurance, minimum debt payments). Step 3: Review your bank statements for the last 3 months to see where the rest goes. Most people are surprised by how much they spend on subscriptions, takeaways, and impulse purchases.

Step 4: Set up automatic transfers. On payday, move your savings amount to a separate account before you can spend it ("pay yourself first"). Use direct debits for all bills. What is left is your spending money — this is the only number you need to track day-to-day.