Mindful Money
Dec 5, 20192 min read

Millennial guide to budgeting.

Laura – Thrifty Londoner portrait

by Laura – Thrifty Londoner

Budgeting often first brings to mind images of restricted amounts of fun, a beans on toast diet and a general feeling of misery – but it shouldn’t! Budgeting doesn’t mean cutting out the things you love, and, dare I say it, budgeting can even be fun. There is nothing quite like the feeling of beating yourself at your own game and having money leftover at the end of the month.

So, how can you get started with budgeting? First of all, you need to find out your monthly income after tax, and write down that exact figure – right down to the very last pound. Then, deduct all of your regular direct debits – that’s things like your rent, utilities, phone bill, Netflix and any other monthly memberships or subscriptions that you might have. The total amount that you have left over is what you have left to work with.

Now, take that amount and allocate that money to other regular expenses like food, commuting and entertainment – things that you can make a pretty educated guess about how much you are currently spending each month.

Next, you have room to tailor the other items in your budget to you and your lifestyle – love to travel? Allocate some money every month to a travel fund. Can’t live without a manicure each month? Add this to your budget. For a budget to work, it’s important to allocate some money each month for the things that you love – whether it’s a Starbucks coffee every morning that makes your heart sing or indulging in a takeaway on a Friday night. If you don’t make room for the fun stuff, you will end up feeling too restricted and throw in the towel after a month or two – trust me, I’ve been there.

A budget is essentially a simple way of tracking your income and your outgoings with the aim of your outgoings never exceeding your income. There are a ton of tools to help you track your spending, from an old fashioned pen and paper, to an Excel spreadsheet, to dedicated apps. I prefer to have my budget in an Excel spreadsheet and tweak this every month depending on what I have planned and what my expenditures have been the previous month. Then, I track my day-to-day spending in the notes pages of my phone – it’s something that has worked for me for years as it’s right there on my phone to keep me accountable for my spending.

When budgeting, it can be really helpful to have a financial goal in mind – whether that be getting out of debt, saving for a holiday, or even saving for a house deposit. Whether you are paying off debt or putting money into a savings account, this amount should be listed on your budget and should come out of your current account each time you are paid. By taking care of your savings and repayments as soon as you are paid, you aren’t tempted to dip into that money throughout the month.