How to build a budget that actually works
1. Start with your take-home pay
Before you can plan where your money’s going, you need to know what’s actually coming in. Your net income (or the money that lands in your account after tax, national insurance and pension contributions) is the number you’ll build your budget around.
Here’s how to calculate it:
- Paid monthly? Use your payslip total after deductions.
- Paid every two weeks? Multiply by 2 (or by 26, then divide by 12) for a monthly estimate.
- Paid weekly? Multiply by 4 (or by 52, then divide by 12).
And don’t forget side hustles, part-time work, government benefits or any extra income – it all counts.
2. Track your spending
Knowing where your money goes is half the battle. Start tracking your spending so you can spot patterns, overspending or sneaky subscriptions.
Try whatever method works for you:
- A simple notebook
- A budgeting app that does the tracking for you
- A spreadsheet (Google Sheets or Excel are great options)
What matters most is consistency. The more you track, the clearer your spending picture becomes.
3. Split your spending into categories
Once you’ve tracked your spending, it’s time to break it down.
There are two ways to categorise:
Fixed vs. Variable
- Fixed: Rent/mortgage, insurance, subscriptions
- Variable: Food, shopping, travel, nights out
Needs vs. Wants
- Needs: Essentials you rely on (like rent, groceries, utilities)
- Wants: Nice-to-haves (like holidays, eating out, Netflix)
This step helps you see where you have to spend and where you choose to.
4. Set goals that keep you motivated
Goals turn your budget from a numbers exercise into something personal.
Break your goals down into:
- Short-term (0–12 months): Pay off a credit card, build a mini emergency fund
- Medium-term (1–5 years): Save for a holiday or a car
- Long-term (5+ years): Save for a house deposit or future plans
Want to really level up your goal setting? Use the SMART method:
- Specific: What exactly do you want to achieve?
- Measurable: Track your progress with a number or deadline
- Achievable: Keep it realistic
- Relevant: Align it with your life and values
- Time-bound: Set a clear timeframe
You can check out our full guide to SMART goals here.
5. Choose a budget plan that fits your life
There’s no one-size-fits-all budget – the best one is the one you’ll stick to.
A popular option to start with is the 50/30/20 rule:
- 50% for essentials (rent, food, bills)
- 30% for wants (fun stuff)
- 20% for savings and debt payments
Want to explore other budgeting methods? We’ve broken them down in [this guide here].
Zilch can help when life throws a curveball
Even the best budget can get shaken by an unexpected expense. That’s where Zilch can step in.
Our Pay over 6 weeks or Pay over 3 months options let you:
- Spread out big costs (like car repairs or gifts)
- Keep your budget steady, even during a pricey month
- Avoid falling back on high-interest credit
It’s budgeting with a bit more breathing room.
6. Stick to the plan and check in regularly
Making your budget is one thing – using it is where the magic happens.
Set regular check-ins to keep yourself on track. Weekly or monthly works well.
Ask yourself:
- Did I stay within each spending category?
- Any surprise costs this month?
- Am I making progress on my savings goals?
Staying consistent is what makes budgeting work – and yes, that includes celebrating wins (even the small ones).
7. Review and adjust as you go
Your budget should evolve with your life. A good habit? Schedule regular check-ins:
- Weekly: 10–15 mins to look over your spending
- Monthly: Take stock, tweak categories, set next month’s goals
- Yearly: Zoom out – are your long-term goals still relevant? What’s working? What’s not?
Think of your budget like your favourite playlist – it changes over time, and that’s a good thing.
Make your budget work for you
Budgeting isn’t about cutting out everything fun. It’s about making sure your money supports the things that matter most to you.
One way to stretch your budget further? Use Zilch Rewards.
- Get rewarded when you Pay now
- Use those Rewards for future purchases
- Make your budget go that little bit further each month
Final tips for budgeting success
Budgeting doesn’t have to be complicated. But it does take consistency and flexibility.
Here’s your quick success checklist:
- Track your income and spending
- Set realistic, motivating goals
- Choose a budget style that fits your life
- Check in regularly and adjust when needed
- Celebrate the wins (every pound counts)
You’ve got this. And we’re here to help every step of the way.