Personal Finance 101: Budget Like an Accountant
Budgeting doesn’t have to be stressful! With a few simple tricks borrowed from accountants, you can take charge of your money and start building a brighter financial future.
Here’s how to do it step by step.
1. Know Your Numbers
Start by listing:
- Income: Your take-home pay after tax and any benefits (e.g., Child Benefit).
- Expenses: Fixed bills (rent, utilities) and flexible costs (groceries, entertainment).
- Savings & Debts: What you’ve saved and what you owe (e.g., credit cards).
Having everything in one place gives you a clear picture of your finances.
2. Stick to the 50/30/20 Rule
Divide your money into three simple categories:
- 50% Needs: Rent, bills, and food.
- 30% Wants: Hobbies, dining out, or holidays.
- 20% Savings & Debt Repayments: Emergency fund or clearing loans.
Adjust these percentages if needed, but make saving a priority!
3. Plan for the Future
Think ahead for:
- Monthly bills: Like rent and transport.
- Big costs: Holidays, Christmas, or car insurance.
- Long-term goals: A house deposit or retirement.
Set aside a little each month so surprises don’t throw you off track.
4. Review Regularly
Check your budget monthly. Look for areas to save, like switching to cheaper utility providers or cancelling subscriptions you don’t use. Small tweaks can free up cash for bigger goals.
5. Use Technology
Budgeting apps like Money Dashboard or Emma help you track spending and stick to your plan. They’re easy to use and can make budgeting less overwhelming.
6. Build an Emergency Fund
Save for unexpected expenses like car repairs or a leaky boiler. Aim for at least three months of essential expenses in savings—start small and build over time.
7. Tackle Debt Smartly
Focus on paying off high-interest debt first, like credit cards. Tools like balance transfer cards can help you save on interest and pay down debts faster.
8. Set Clear Goals
Set realistic money goals, like saving £2,000 for a holiday or paying off a £500 overdraft in six months. Write them down and track your progress to stay motivated.
9. Think Long Term
Once you’re on top of your budget, grow your money:
- Open a Cash or Stocks & Shares ISA for tax-free savings.
- Contribute more to your pension—free money if your employer matches it!
- Explore simple investment options if you’re ready.
Final Tip
Budgeting is about taking control, not giving things up. Start small, stay consistent, and celebrate every win—your future self will thank you!
Do you want to gain an in-depth understanding of accounting? We offer AAT-accredited courses tailored for you here.
