It’s easily done. Payday arrives, you feel flush for a few days, then gradually realise you’re not sure how much you actually need for essentials. Before you know it, you’re back to checking your bank balance before buying lunch and counting down to the next payday.
The guilt kicks in, along with that familiar stress about money. But here’s the thing – budgeting isn’t about restricting yourself or becoming a financial killjoy. It’s about taking control so you know exactly where you stand and can spend without the worry.
Why most people avoid budgeting
Let’s be honest – budgeting sounds boring and restrictive. Many people think it means giving up everything fun and tracking every penny like some sort of financial sergeant major. But that’s not what practical budgeting looks like.
Real budgeting is about understanding your money flow so you can make informed choices. Want to go out for dinner? Fine – but know what you can afford without affecting rent money. Fancy a weekend away? Great – plan for it instead of panicking about it afterwards.
Getting started: the simple approach
Forget complex spreadsheets or expensive budgeting apps. Start with pen, paper, and your bank statements from the last three months.
Step 1: Know what’s actually coming in
If you’re on salary, this is straightforward. If you’re self-employed or have variable income, look at the last year’s bank statements to get a realistic average. Always be conservative – if you’re not certain money will arrive, don’t include it in your budget.
Step 2: Track where it’s really going
List everything you spend money on: rent, council tax, utilities, food shopping, transport, phone contract, streaming services, takeaways, coffee, clothes, nights out. Don’t judge yourself – just get honest about where the money goes.
Step 3: Do the maths
Subtract total expenses from total income. If you’re in positive figures, you’ve got money to work with. If you’re in minus figures, you’re spending more than you earn and need to make changes.
Making your budget work in practice
Cut the stuff you don’t actually value: Those subscriptions you never use, the premium coffee when regular tastes fine, the convenience shopping that costs twice as much as planning ahead. The goal isn’t to cut everything – it’s to stop wasting money on things that don’t matter to you.
Build a safety net: Even £20 a month builds up to £240 over a year – enough to handle most small emergencies without panic borrowing. Think of it as buying yourself peace of mind rather than restricting your spending.
Tackle expensive debts first: Credit card minimum payments keep you trapped for years while enriching credit card companies. Always pay more than the minimum if you can, or consider consolidating expensive debts into a cheaper loan.
When budgeting isn’t enough
Sometimes the problem isn’t spending too much – it’s not having enough income to cover basic costs. If your budget shows you genuinely can’t afford essentials, budgeting alone won’t solve the problem.
At London Mutual Credit Union, we help members in various situations. If you’re dealing with temporary financial pressure, our affordable loans can help bridge gaps without the expensive interest rates charged by payday lenders. If you’re struggling with multiple debts, consolidation loans can reduce your monthly payments and give you a clear path to being debt-free.
We also help members build emergency funds through regular savings accounts. Even small amounts saved consistently can provide the financial buffer that prevents minor setbacks from becoming major problems.
Building habits that stick
The best budget is one you’ll actually use. Keep it simple, review it monthly, and adjust when your circumstances change. Don’t aim for perfection – aim for better control over your money than you had last month.
Many of our members find that salary deduction helps with budgeting. When savings or loan repayments come directly from wages, you never see the money to spend elsewhere. It makes budgeting easier because you’re working with what’s left after your financial commitments are already handled.
Remember, budgeting isn’t about becoming perfect with money overnight. It’s about understanding where your money goes so you can make conscious choices about spending, saving, and planning for the future.
