My Steps to Creating a Basic Budget.

As the the Coronavirus pandemic continues, more and more people are struggling financially; with more people claiming benefits, the pressures of managing money has become even more important.

Setting a budget is vital in helping get through tough times; it won’t give you any more money, but it will give you clarity, even if the picture is bleak.  From clarity you can start to take action.

Budgeting can also give you a level of control, rather than the chaos of the snowball effect of closing your eyes and hoping for the best.

Taking responsibility for your finances can be quite empowering; you may still be struggling financially, but having a plan that you have created (even with help) will build your confidence and increase positivity.

In early 2016 my husband had a mental breakdown, and he has been unable to work since.  Losing a salary had a massive impact on us and so we had to budget, we have had to cut back our spending drastically.

I’m not going to sit here and tell you that budgeting is the answer to your troubles, because it isn’t; we had to make some tough decisions, and it was (and still is) really stressful when you have to admit you can’t afford something you really want, and could have bought easily before.  We experienced lots of lows, that were different for both of us.  I had the pressure of earning the money and trying to put controls in place for spending, and Paul felt guilty and a burden because he wasn’t earning and contributing.

Paul was getting benefits, including ESA and PIP, however these have only offered a tiny percentage of what Paul was earning.  It is also not easy to get benefits, especially for a mental health disability; in fact we are having to go to a tribunal to try and get PIP reinstated.

While it has taken some time, and takes constant monitoring, we feel a bit more in control of our finances, and have even been able to put some savings aside!

My reason for sharing a bit of my story before I go into the basics of budgeting, is that I want you to know that while everyone’s experience is unique, I can truly say that I empathise, and can understand some of the stresses you may be facing now.


So, what is a budget?  In very simple terms it is a plan that shows how much and individual or an organisation will earn, and where those earnings will be spent.  The ideal scenario is to spend within the limits of what you earn; this is easier said than done.

Some people really don’t like dealing with their finances, and some of you may prefer to leave it to other family members to sort out; I would encourage everyone in the family/group to get involved in the process, even children (depending on their age) because t creates a ’we’re in this together’ mentality and everyone understands what is happening and why certain decisions are being made.

Here is my plan for setting up and implementing a basic budget:

Step 1 – Go through your costs.

Go through your bank statements for the last six months and list out your monthly expenses.  It is worth grouping them into different categories such as rent/mortgage, food, entertainment, travel, etc.

There are a lot of budgeting apps out there, but the simplest thing to do is use an excel spreadsheet.

Step 2 – How are things looking?

Are your monthly costs (outgoings) more than your monthly income?  If they are, then we need to start seeing if we can cut some costs.

Step 3 – Set a goal.

As you will see when we get to step 4, emotions can ride high during this process, especially if there is more than one person involved; therefore set a clear goal of what you want to achieve, that all of you agree to.

Step 4 – Cutting costs.

This is probably the hardest part of the budgeting process.  How tough you have to be at this stage depends on the size of the difference between your income and costs; you may have to make some very difficult decisions.


Mentally, this can be very challenging, and fraught with negative emotions.  If you are single it can be easier, but if you are living with someone else, or have a family, then it can mean arguments and resentments, hence why I suggested everyone is involved in some way and you have a clear goal you have all agreed to.

Take each section of your costs and look at them closely; some costs will be fixed such as rent or a mortgage payment, others are more in your control to change.

It is good practice to try and view this as a short term plan; it is not how things will look for the rest of your lives.  While you may have to sacrifice something now, it doesn’t mean you can’t get it back when things improve.

Try and be fair to everyone in the family/group and keep the costs that benefit everyone; alcohol can only be enjoyed by adults; how much is a bottle of wine compared to a bag of sweets that everyone can share and enjoy?

family piggy bank - photo by rawpixel on unsplash

Some decisions can actually benefit your health and mood.  Processed foods, takeaways cigarettes and alcohol are expensive and damage your health, so maybe you can reduce the amount of these you consume, aiding your pocket and your wellbeing.

Look at your contracts such as mobile phone, Internet, etc…. Can you get a better deal?  Make a note of renewal dates and shop around.  My husband and I recently changed our mobile phone contracts to SIM only and together we have reduced our payments by £60 a month!

Step 5 – Set limits.

Decide how much of your income you are going to spend per month on each expenses section.

Step 6 – Can you save?

Whatever your income you are having to work hard to get it, so make sure you reward yourself.

With online banking it is so much easier to manage your money, so why not set up a savings account and have a certain amount transfer into it every week or month.  It can be whatever you feel you can afford, from £1 a week to £100+.


It is important to have some savings for that ‘rainy day’ or possible emergency, but don’t forget to reward yourself as well, otherwise it can feel as though you are just working to pay bills. 

Set a goal for what you want to save for; if you can only spare a small amount each month, reward yourself on a monthly basis, a plant for your garden, a book, or a bottle of wine.  If you can save more then think of something bigger you want such as a holiday (when we can take them again), or that jacket you want. 

Maybe you can split the savings so some go to ‘rainy day’ and some go to reward.

Step 7 – Stick to it.

There’s no point setting a budget if you are not going to stick to it.  There are lots of tools you can use to help monitor what you are spending.  We always use the self scanners in the supermarket so we can see the running total of our shop.

For some of the sections use cash only so once the allowance has gone, it has gone.

Step 8 – Monitor and adjust.

Just because you have created a budget doesn’t mean it is set in concrete, and while I want you to be strict with yourselves, I don’t want you beating yourselves up if things don’t go exactly to plan (remember we are trying to make this a positive experience).

You may find you haven’t allocated enough to one section, and have a surplus in another section.  You may simply have overspent; if this happens take it as a learning experience and get back to the plan. 

Your expenses can change depending on the time of year, your energy bills will be higher in the winter months.

You may even start earning more money!

Credit Cards & Loans.

One of your costs may be repayments of loans and credit cards; it is worth speaking to your creditors if you are struggling as most will have services in place to help, especially in this most difficult of times.

Hopefully they will be flexible and offer help, but what I would say is that they would prefer you to seek help before you get too deep into trouble.  They will also want to see that you are being honest with them and committed to whatever agreements are made.


I hope that these steps help.  I am planning to release some basic budgeting videos to help further, but in the meantime, if you are struggling then seek help, don’t ignore money problems because they won’t just go away; if anything they will only get worse. 

support people image

Most importantly don’t suffer in silence, speak to your bank, they should have services to help advise and support you.   There are also lots of charitable organisations that can help with the psychological impact of money stress, and they may be able to give you some moral support when things are getting a bit much.

Whatever happens, don’t beat yourself up; this is not about past decisions you have made; it’s about learning, setting controls, and moving forward in a positive way.

you got this - photo by sydney rae on unsplash

Published by Kim Masters

Kim is a South African living in Bedfordshire. She specialises in helping businesses and individuals with their finances, combining her 25 years of accounting experience with her passion for healing therapies.

Your Comments

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: