New To budgeting? Here’s a Short Guide to Help you Get Started

budget guide

Being in control of your money gives you options.

If you’re new to the whole money thing, setting a budget is a great place to start. And no, budgeting doesn’t have to be boring, tedious or annoying. Budgeting can take only one hour per month – and can make all the difference to your future. We thought it would be useful to put together a little guide to help you get started on your budgeting journey. 👇

Assess the situation

First things first: how much money is coming into your account and leaving it every month?

Knowing where your money is going every month is the first step to making a budget and sticking to it. The good news is it doesn’t have to be complicated or time-consuming; simply download the bank statement of the previous month and check what’s going where. If there are any expenses that shouldn’t be there or are unnecessary, consider getting rid of them (that’s more money for you! 🎉). If you want to get real nitty-gritty, you can take out a spreadsheet and divide all your expenses into separate categories, such as:

  • Groceries
  • Rent
  • Child-related
  • Fun
  • Etc.

Don’t underestimate the power of simply tracking where your expenses are going – not only is it useful information, but it can be very motivating and encourage you to set a budget. Talking about budgets… 👇

Test the 50/30/20 rule

Budgets can be a little intimidating: Where do I start? What goals should I be setting? Do I really need to track every single expense?

The good news is that the 50/30/20 budget rule is a great place to get started if you don’t know much about budgeting. The rule is easy to remember, and states that from your after-tax income:

  • 50% should go to needs (rent, groceries, transport)
  • 30% should go to wants (eating out, holidays, cinema)
  • 20% should go to savings (gold pot, paying off debt, emergency fund)

This is a rule of thumb, so it may not always work depending on your situation. If, for example, you live somewhere expensive like London, you may need to allocate more of your income towards needs. If you are saving for a downpayment or paying off more debt, you may want to allocate more of your income to savings. Having said that, the rule is a good way to see how your spending is doing overall. Here’s an example:

Jenny earns £2,000 per month. She spends £1,000 on bills, rent, food and any necessary expenses. She then spends £600 on wants, such as eating out, holidays and more. Every month she saves £400, half of which goes to her emergency fund, and half which goes to her Minted gold pot (yes, she’s a Minted user 😉).

Before creating your budget, look at your previous month. How did you do according to the 50/30/20 rule? Did overspend on wants or needs? This will help you see what you need to do to get your finances back on track.

Set some goals

You now have a better picture of where your money is going and whether you’re on track or not. But the exciting part of managing your money is setting goals: what is something you really want to do? This could be buying a house, travelling to somewhere exotic, or being completely debt free.

Whatever you’re dreaming of, you’ll be able to make it happen by creating a plan. Following the 50/30/20 rule above, see how long it would take you to reach your goal if you saved 20% of your income. If it takes too long, see what adjustments could be made: can you reduce your monthly utility bills? Or do some work on the side to save more money? Depending on how badly you want to achieve this goal, you’ll be able to see any adjustments that need done.

If no goals come to mind, some good advice is to start saving for an emergency fund. They can be life saving if anything happens (and as we can see in 2020, anything really can happen!).

Start thinking long-term

Yes, that means retirement, your child’s education or a house. 🏡

The truth is that depositing money into a savings bank account isn’t enough to save money in the long term. With inflation, your money loses value over time. With low interest rates, your money isn’t making a return, and you’ll take a long time to reach those goals.

What are some ways to increase the return on your savings? There are a few ways, such as cash ISAs, stock marketing investing, property investing and gold. Picking the best option depends on your tolerance for risk, how soon you will need the money and how much you want to invest. We always recommend doing your research and comparing your options.

At Minted, we believe that investing in physical gold is one of the best ways to save your money long term. Bullion gold has several centuries of history of being a store of value, beats inflation and is outside of the monetary system – this means that you aren’t exposed to the decisions taken by politicians, economists and companies trading on the stock market. If you’re new to the gold world but want to learn more, the Minted blog has a few resources to help you get started:

If you’re new to budgeting, welcome to the club! Budgeting is a great tool to take control of your money, set goals and actually achieve those dreams that you have. By implementing a strategy such as the 50/30/20 rule and setting up monthly contributions to your savings, you’ll quickly feel in the driver’s seat of your financial life. Money isn’t everything, but we can all agree that being in control can drastically improve the quality of your life.

Araminta Robertson

Araminta Robertson

Araminta is a financial writer and self-professed Fintech nerd. She likes writing about investing, the future of payments and of course, gold.
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Disclaimer: Gold prices can fluctuate over time and may increase and decrease. The Minted App Ltd does not accept any responsibility for any loss caused by information provided on the website. Minted is not an investment advisor and recommends doing research before making a purchase.