Money Advice Service

The best way to save money and keep track of your spending is to stick to a budget. Follow our simple steps to make budgeting easier.

Keep track of your spending

In order to keep to a budget, you need to know what you’re spending and whether it’s more money than you have coming in. That means tracking everything you spend. You should include:

  • Household necessities – such as your rent or mortgage, bills and travel to work
  • Clothes, toiletries and leisure – for example, meals out, trips and takeaways
  • Impulse buys and treats – which could include magazines, coffees, tech gadgets or beauty treatments

Make a note of everything you spend for at least a month – three months or longer would be ideal but it’s also good to do it every few months to see if your habits have improved. Write down what you spend as soon as you spend it, or you may forget. Talk to your family about the best ways to keep track of what’s being spent – it works best if they join in too.

You can keep track of your spending by:

  • Getting a notebook and writing down what you spend
  • Making a note on your smartphone’s notebook feature
  • Using a smartphone app – there are several that allow you to calculate the costs quickly

You will probably find that once you start keeping a note of what you spend your money on you will end up spending less. Sometimes just the simple act of writing down how much is being spent means that we spend less on treats and impulse buys. At the end of the month, have a look at what you’re spending most of your money on and, if it’s not essential spending, see if you can go without it. Use our Cut-back calculator to help you work out where you can reduce your spending.

You don’t have to give up treats altogether, but you might be surprised at how much small things can add up to. For example, if you normally buy a daily coffee costing £2, that costs over £60 a month or £730 a year. If you make your coffee instead, you could save enough to pay for your holiday after just one year.

Keep to your budget

Once you’ve seen how much you’re spending and where you can make some easy cut-backs, it’s time to draw up a budget. A budget is a record of money you have coming in and money you spend. What you’re aiming for is to make sure you always spend less than you have coming in. It’s easy to get started – just use our Budget planner.

If you are overdrawn regularly or need to borrow money to see you through to your next payday, your next step is to see where you can make savings on your biggest expenses or if you can increase your income.

Check your bank balance


Over half of UK households keep a regular budget. Most of those who do say it gives them peace of mind about how much they are spending, and makes them feel better about life in general.

Source: Money Advice Service research (Oct 2012)

Check your bank balance regularly to see how much you have. If you bank online or use mobile banking, you can do this easily. Otherwise you can get a printout of your balance and a mini-statement at a bank cash machine.

Register for text alerts from your bank to help you stay in control. These can tell you when you get a large payment into your account, when you’ve made an expensive purchase and how much is in your account at the end of the week.

Set yourself goals

Set a goal for how much you want to cut back by (every month or every week – depending on when you get paid) and challenge yourself to do a bit better each time. Focus on lowering your spending in one area in turn. For example, cut back on your food spending one month and on how much you spend on going out the next.

Use our Cut-back calculator to see where you can make savings on things you buy regularly.

Share the responsibility

Get everyone in your family involved with keeping to a budget. Sit down together and make a plan that you can all stick to. Work out how much spending money is available and agree between you what you’ll each have.

Check in with each other regularly – every week or more often – to see how well you’re each doing. That way you can encourage each other to save a bit more.

Think before you buy

Wait for one or two days before you buy something that’s expensive or not a day-to-day necessity. We tend to make much better decisions when we have time to think about it, so talk about it with your family or simply ‘sleep on it’.

Set a savings target

Research from NS&I shows that people who save for a specific goal save £40 a month more than those who don’t, so start by setting a savings goal. Maybe you’d like to go on holiday, or perhaps you need a new car?

Next, work out how much you can pay into a savings account each week or month and set up a standing order. You can find out how to do this in our guide Direct Debits and standing orders. If you save £5 a week you’ll have over £250 after 12 months, while saving £50 a month adds up to £600 after a year.

If you need help setting a savings goal and working out how much you can save, read our guide called How to set a savings goal. Keep a picture of the goal you’re saving for (a sofa, a beach holiday or a new car) on your fridge door or in your purse or wallet, to keep you on track and stop any impulse purchases.

Be flexible

Life is unpredictable so try and review your budget and your spending if there’s a change, or at least every couple of months.

You may get a pay rise, which means you can save more, or you may find your household bills increase. Our section on Cutting costs has lots of helpful information on how to spend less.

This article is provided by the Money Advice Service.