Clever budgeting techniques
Most of us know we should be spending less, but sometimes it feels, well, next to impossible – especially when we don’t know what we’re spending our money on. But the truth is, that budgeting is much easier when you have a few money management tricks up your sleeve.
Published: 12 Apr 2022
Let’s take a look at our favourite budgeting techniques
The 50/30/20 rule
We know there isn’t a ‘one size fits all’ when it comes to budgeting, but the idea with this technique is to split the money you’ve got coming in neatly.
Your aim is to allocate your budget similar to this:
1. 50% on needs
2. 20% on debt or savings
3. 30% on wants
It’s known as the 50/30/20 rule, but you may need to tweak the percentages to suit you. For example, if you’re paying more on your needs, then make up the difference from your wants, like this:
1. 60% on needs
2. 20% on debts or savings
3. 20% on wants
The order of this is key, don’t move past step 2 to 3 until you’ve taken care of all costs in steps 1 and 2.
This method is great for helping you get into good money habits. Making sure you’re covering the things you need to like paying bills, clearing debt or saving what you can. Plus you should still get to enjoy a little of what you’ve earned too.
Allocate the first half of your money to things you need to buy. Now, ‘need’ can be subjective - ‘I need those shoes’ for example - so when we talk about needs here we mean real, proper needs. Think mortgage, gas bills and essential travel. Not your Sky package or that unused gym membership that you’ve forgotten about.
Paying less than 50% on things you need? Great. You’ll be able to put more towards your debts and savings or those ‘wants’ you’ve got in mind.
2. Debt or savings
The next 20%, and anything left over from before, should be used towards paying off any outstanding debt like credit cards or loans. If there’s nothing to pay then that amount should go into a savings pot.
Around 30% is for you to spend any way you want. Whether that’s eating out, Netflix, a holiday, a new pair of shoes is up to you. Anything left over can go into your savings account.
The envelope system
Fear not. We aren’t suggesting that you put your hard earned cash into an envelope which could end up in the recycling bin by mistake.
This method helps you divide your money 21st century style. Instead of putting your money in paper envelopes, you divide it between separate accounts.
1. The main account your salary goes into is used to pay all your Direct Debits and regular outgoings by standing order. Don’t make any other transactions on this account.
2. You transfer an everyday spending budget into a second account that you use for your regular expenses throughout the month e.g. food shopping, travel, petrol, entertainment.
3. Last and by no means least, your savings account sits separately. This is your rainy day fund for whatever your savings goals are – a house deposit, holiday, maternity/paternity leave or just to have as an emergency fund.
This method can be great to help keep your needs, savings and wants separate, so should help you to avoid overspending in one area.
Useful budgeting tools
Mobile banking apps
Most banks will have an official banking app, which will give you access to your accounts at the touch of a button. The main benefit being you’ve got a single view of all of your bank accounts in one place. Making it easy to track spending, transactions and payments.
Our Mobile Banking App does just that and more. Making day-to-day banking as simple as possible, whilst giving you plenty of detail to help you plan ahead. See how you can benefit from downloading our app.
You can ringfence your shopping budget easily with Clubcard Pay+, helping you to be more mindful with your spending. It even rounds up most of your purchases to the nearest £1 and puts the difference in a separate savings account for you to use on a rainy day. Great if you find it hard to put a bit aside each month.
Another feature is that you’ll also collect Clubcard points in and out of Tesco, giving you the power to make your money go further.
Tesco Clubcard Pay+ is available to Tesco Clubcard members who are resident in the UK and aged 18 or over. Accounts are subject to status. Clubcard points are calculated on each purchase transaction. Minimum spend applies when collecting points.