Budget Better – Our Top Tips for Practical Budgeting

Did you know that experts recommend you should have approximately 4 times your salary saved in an easy access account in case of emergency?  If you struggle with saving and sticking to a budget, this may seem like an impossible feat.  But, by making just a few changes to the way you manage your money, you can set yourself on the right track to a healthier bank balance!

Set a Goal

Having a specific goal in mind can change your perspective on your spending.  Whether your goal is short term – such as saving for a wedding, a car, or a holiday – or long term like paying into a pension for your retirement, you will find that this little reminder makes it easier to stick to a budget.

Short term goals are goals you wish to achieve within the next 0 to 3 years.  For example:

  • Saving for a holiday, a car, a wedding or Christmas
  • Paying off credit card debt
  • Cutting non-essential spending

Medium term goals are goals you wish to achieve between 3 and 10 years.  For example:

  • Saving for a deposit or to pay a lump sum off a mortgage
  • Saving for your child’s education
  • Building up an emergency fund

Long term goals are goals you wish to achieve in 10 years or more.  For example:

  • Paying into a pension for your retirement
  • Creating a long-term plan to make your money work for you
  • Future financial stability and independence

Set a Budget

Working out a budget can seem like a tedious task, and some of us may even be a little apprehensive about taking a look at exactly where our money goes every month.  However, taking the time to manage your money better will pay off in both the short and long term!

Start by calculating your monthly income.  Focus on your net income rather than your total salary, as this can lead to overspending if you thing you have more money available than you actually do.  Also make sure to include any other income sources you may have, such as child benefit or maintenance payments.

Once you know how much money you have coming in, the next step is to figure out where it’s going.  Begin by listing your fixed expenses such as rent or mortgage, utilities and car payments.  Next, list your variable expenses such as groceries, fuel and social activities.  This is usually where you will find opportunities to make savings.

Record your daily spending regularly and accurately to give you a correct overview of your spending habits.

Make a Plan

This is where everything comes together: What you’re actually spending vs. what you want to spend. Use the variable and fixed expenses you compiled to get a sense of what you’ll spend in the coming months. Then compare that to your net income and priorities. Consider setting specific—and realistic—spending limits for each category of expenses.

You might choose to break down your expenses even further, between things you need to have and things you want to have. For instance, if you drive to work every day, fuel counts as a need. A monthly music subscription, however, may count as a want. This difference becomes important when you’re looking for ways to redirect money to your financial goals.

Adjust your Spending to Stay on Budget

Now that you know exactly what’s going in and out each month you can make the necessary adjustments so that you don’t overspend and have money to put towards your goals. Can you skip movie night in favour of a movie at home? If you’ve already adjusted your spending on wants, take a closer look at your spending on monthly payments. On close inspection a “need” may just be a “hard to part with.”

If the numbers still aren’t adding up, look at adjusting your fixed expenses. For example, could you save more by shopping around for a better deal on your broadband or car insurance?

Remember, even small savings add up over time. You might be surprised at how much extra money you accumulate by making one minor adjustment at a time.

If you are struggling with budget planning, the CCPC provides a budget planning calculator, which can be found through the link below:


At Gallivan Financial, our team of experts are always on hand to help. Get in touch today. We’ll be delighted to hear from you.

The Gallivan Financial Team

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