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  • Photo du rédacteurAnh-sophie Clery


Do you have a personal budget? How easy is it for you to stick to it?

Well, I often find that people hate budgeting because:

  • It is perceived as a punishment,

  • It is too complicated,

  • It is time-consuming,

  • They think they don’t need one,

  • They don’t know how to start,

  • They had a budget but it didn’t work for them, or

  • It makes them feel bad about their finances

Or when they do have a budget, it is not realistic – they can’t seem to stick to it.

Where do you stand?

In my experience budgeting has proven to be an essential tool that makes my life easier. It gives me a clear picture of where my money goes, reduces stress and helps me plan and organise more efficiently.

I do believe that budgeting plays a crucial role in managing my finances and designing my financial success.

In this article, I want to share with you the reasons why you need to create a budget and I will show you how to create your own budget that works for you.

But before we get started, let’s go back to basics, shall we?


A budget is a plan that summarises what you earn and how you intend to spend it over a certain period.

It is also a control tool that compares your initial intentions for your money to your current spending.

A budget is therefore a system of planning and control that aims to guide you in achieving specific goals.

A personal budget can be split in 3 categories:

  • Income budget: How much do you plan to earn?

  • Expenses budget: How much do you plan to spend?

  • Projects budget: How much do you allocate to specific projects?


1. To manage your money

Budgeting ensures you have enough money. How many times did you spend the month wondering if you would make ends meet? And how did this make you feel? Probably stressed, worried and insecure, right?

Say no to this torture and get budgeting! A budget can give you each month an overview of your spending. It enlightens you regarding your essential expenses and gives you the flexibility to allocate the remainder of your money however you please.

It enables you to anticipate instead of reacting. Having this overview at the start of the month gives you some sort of leverage whereby you can adjust your spending plan – depending on the outcome - before you actually spend any money.

Budgeting teaches you discipline and self-control. The only way you can achieve your goals is by sticking to the plan (self-discipline). This will also teach you to control yourself and to avoid purchasing based on your emotions. Before each non-essential purchase you will ask yourself two questions: “Do I really need this?” and “If I don’t need this, do I have enough money to treat myself to this?”.

2. To Plan specific projects ahead

You also need a budget to prepare your projects. These could be a trip to Australia, buying a house, your wedding, or treating yourself to a spa weekend.

Therefore a budget will enable you to think about the cost, the timescale and the feasibility of your project ahead of it happening. This will allow you to run various scenarios and select your preferred option.

3. To control your spending

This is a vital aspect of budgeting. Indeed the idea is to track your expenses (and your income) and to analyse how they compare to your original plan. I find this to be a powerful exercise that helps me identify:

  • Whether my budget is realistic,

  • How well I can stick to my budget,

  • What my spending patterns are, and

  • Areas to improve my money management.

4. To build wealth

Finally, a budget can enable you to build wealth by:

  • Growing your income: identify and implement ways to increase your income consistently (e.g passive income, investments, pay rise etc…)

  • Controlling your costs: reduce (or eliminate) your personal debts, constantly track your expenses and generally spend less than you earn.

I hope you understand now why you need to create a budget today and how it can help you manage your day to day finances, plan your projects and gradually build wealth. Now let’s dive into how we actually create one.


Step 1 - set your goals

Setting goals is the first step of preparing your budget.

I find there are two types of goals when it comes to budgeting: general and specific goals.

I believe a budget answers the same common general goal of managing our finances. For example, I primarily use my budget to have an overview of my spending throughout the month and to see whether I am at risk of being overdrawn.

You may also set specific goals for a determined period such as doing a city break every other months, buying a house in London, taking a social media course, learning an instrument, spending more time out with friends etc… There are no restrictions to the amount of goals you set for yourself in a particular period; it’s totally up to you.

I suggest you write down your goals on a piece of paper, prioritize them and include a time frame.

Step 2 - use your bank statements

If you’ve never done a budget before, a good starting point is to use your past three months bank statements . This will give you an accurate picture of your spending patterns.

You can download those as a .csv file ready to open in an Excel spreadsheet. Alternatively you can download them as a PDF and exploit the data on paper.

Categorise your cash in (what comes in your account ie income) and cash out (what comes out of your account) into as much details as possible. See an example below.

Step 3 - create your budget

With your goals in mind and your bank statements summary (step 2), you are now ready to create your (first) budget.


I personally budget for the whole year and re-forecast every month. I do believe that budgeting annually is important as it forces you to think ahead and to anticipate better. I also appreciate that you may not be aware of all circumstances now which makes it tricky to plan over a year. This is why some people plan over six months or even one month. There is no rule – it is a personal budget and the choice is yours.


I have created a free template for you to use. Make sure you download it before you read the below sections.

Income budget

The first element to budget for is your income. Include each stream of income separately.

Your budget salary (main income) should be net of tax, health and pensions contributions. In countries where the income tax is not deducted from your salary every month you will need to account for it. Your previous tax statement can be used as an estimate.

Include any bonus and pay rise estimates in this section.

Expenses budget

There are two types of expenses:

  • Essential expenses. These are the expenses you need to incur to live and work decently. E.g: rent, utilities, food etc…

  • Non-essential expenses. As opposed to essential expenses those expenses relate to leisure (or fun). E.g: restaurants, cinema, gym membership etc…

You get to determine which expenses are essential for you. I gave you some examples but ultimately the decision is entirely yours.

The idea in distinguishing between your essential and leisure expenses is to give you more clarity and to highlight any opportunity to reduce your costs down. Leisure expenses will be easier to cut down than your essential expenses for example.

Be realistic about budgeting your expenses. Use a three month average cost (step 2) when your spending patterns are not fixed; for your food shopping for example. Use an actual cost for all your contract expenses such as your mobile phone, broadband or utilities.

Also think about your goals. How you allocate your income between your expenses may differ depending on your goals, so make sure to always keep them in mind.

Projects budget

Projects may include your general savings, emergency fund, investments or other projects. You should have already thought about these when setting your goals prior to budgeting. If you have more projects coming to your mind it’s not too late to add them in!

Generally you plan your projects with the money available in your bank account after paying your expenses. You can then allocate a certain portion of money available to each project every month.

You have two options here:

  • Allocate the money available after paying your essential expenses but before your leisure expenses or,

  • Allocate the money available after paying ALL your expenses ( essential AND non-essential).

My preferred option is the first one whereby I budget in order for my income, my essential expenses, my projects and my leisure. I am more flexible about my leisure budget than my projects.

For sure I’d rather eat out less often (hence reducing my ‘restaurants’ budget) than delaying the purchase of a house (because I didn’t have enough money to allocate to this project). Makes sense?

Step 4 - track your spending

The hardest part is done (planning)- Phew! Let’s set the time to be one month from now - the time to review how you did this month (control).

The exercise of tracking your spending consists in comparing your budget to your actual spend. In the free budget template you will find the actual v. budget template for you to fill in.

Tools. Use your month bank statement and / or your receipts to fill in the actual income / expenses.

Time. Practice this exercise every month. I do it every week for better control.


  • Identify areas to reduce costs (when you have overspent v. budget) and to increase savings for projects (when you have under-spent v. budget);

  • Identify new costs: are they recurrent or ad hoc costs?

  • Check whether your budget is realistic: Do you struggle with sticking to your budget?

  • Revise some lines in your budget and test the effectiveness of the new budget.

In summary a budget gives you the clarity and the control you need to manage your finances, the freedom to plan your projects, the flexibility to allocate your money and the peace of mind knowing how each month is going to end.

Nevertheless a budget is a challenging exercise whereby you need to set a budget that serves both your personal and professional goals whilst reflecting your lifestyle. It may require a few months for you to find the right balance between all your expenses so be prepared and be patient.

With practice, experience and commitment you will be an expert!

How do you find budgeting? What do you struggle the most with? Do you have a different method? I am curious to know.

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