How to make a budget that will actually work, by Michela Allocca on YouTube. 2 min.
- Video length
- 2 min
- Time to do it
- 30 minutes
- Difficulty
- Easy
- Steps
- 9
What you need
Steps
Write down your monthly take-home pay. Use the amount that actually lands in your account after tax, not your salary before deductions.
Open your last two months of bank and card statements and group every purchase into a few broad categories, such as housing, food, transport, bills and fun.
Add up your fixed costs first: rent or mortgage, utilities, insurance, loan payments and subscriptions. These stay roughly the same each month.
Subtract the fixed costs from your take-home pay. What is left is the money you can split between variable spending, savings and debt payoff.
Set a limit for each variable category using what you really spent last month, not a guess. If you spent 400 on food, do not budget 200 and set yourself up to fail.
Add a buffer line of about 5 to 10 percent of your income for irregular costs like car repairs, gifts and annual bills.
Make savings and extra debt payments a fixed line you fund on payday, before you spend on anything else.
Put the numbers into a spreadsheet with a planned column and an actual column for each category, and log your spending once a week.
At the end of the month, compare planned against actual and change one or two categories only. Small adjustments stick better than a full rewrite.
Tips and common mistakes
Use last month's real spending as your starting number so the budget reflects your life rather than an ideal version of it.
Start with three to five main categories. More categories means more work and a budget you are likely to abandon.
Keep some fun money in the plan. A budget with no room for treats rarely survives the second month.
Check in weekly rather than waiting for the month to end, so you can correct overspending while there is still time.
Questions
How much should I budget for groceries and other flexible costs?
Base it on what you spent in the last two months, then trim by 5 to 10 percent if you want to cut back. Guessing a low number usually leads to overspending.
What if my income changes from month to month?
Budget from your lowest recent month and treat anything extra as a bonus for savings or debt. That way the essentials are always covered.
Do I need a budgeting app?
No. A simple spreadsheet or paper with planned and actual columns is enough to start. An app helps later if you want automatic tracking.
This guide was drafted from the video's details and general task knowledge. It has not been checked against the full video. Check the video and relevant product instructions before following a procedure. Report a correction.
