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Budgeting
Taking control of your day-to-day
Creating a budget helps you take control of your day-to-day finances and understand what’s coming in, what’s going out and where it's going – so you can prioritise spending and saving.
If you make a plan and stick to it, it can help you to make your money last and potentially save each month. A great way to start is to detail your spending and income. Thankfully, this can be found in one place: your bank statements.
Download your free budget planner
Our simple budget planner can give you an overview of how and where you’re spending your money each month.
Discover the 50/15/5 rule - in 60 seconds
See how you can use this helpful rule-of-thumb to find the right balance between spending and saving.
Are you worried about the state of your finances?
You're not alone. 27%* of people say their most pressing financial need is to budget their day-to-day income and expenditure. And 34%* of people say they have spent more than they can afford in the past 6 months.
1. Look at your income & expenses
Take a look at your last three bank statements — they should give you a good idea of your income and spending, and where you might be able to make savings.
It can be helpful to separate:
- Essentials – things like bills, food, rent or mortgage payments
- Non-essentials – those extra items like eating out, shopping and subscriptions
Your budget should tell you if you’re spending more, or less, than your income each month.
2. Make a plan & set goals
If your spending is lower than your income — well done! If that’s you, you can focus on saving and putting that money to good use towards your goals.
But if you’re spending more than your income each month, it is a sign that you need to make changes right away. You may be managing month-to-month by dipping into savings, or worse using overdraft or credit card borrowing which can mean extra interest costs in the future.
3. Regularly review your budget
Now you’ve built your budget and have set yourself goals, you should regularly check that you’re keeping to your plan. This way you can make sure that you're on track to achieve your goals.
Remember, you can make changes where it’s not working or where you feel you can potentially save more.
The 50/15/5 rule
As a starting point for your budget you can use our helpful rule-of-thumb to find the right balance between saving and spending.
Some costs are essential – you need to eat, and you need a place to live. If possible, spend no more than 50% of your take-home pay on "must-have" expenses like housing, food, transport, child care, debt payments, education and other obligations (e.g. insurance).
Top Tip
Some essential expenses can be flexible and small changes add up. It can be worth evaluating what your essentials are and making sure you're checking items such as any subscription services and online purchases.
No matter what stage you’re at, it’s important to save for your future. We suggest you save 15% of your pre-tax household income for retirement. Remember, this is pre-tax income and the amount you should save towards your retirement each month will depend on when you start saving and your circumstances.
Top tip
Log into PlanViewer to find out how your contributions into your Retirement Savings Plan work. If you can, there may be advantages to contributing more into your retirement savings, so it's worth exploring. Plus, it's a great way to make your money work hard for your future.
Having short term savings – an emergency fund – is important for feeling financially well. An unexpected event, like illness or job loss, can be made worse when we aren’t prepared financially. We suggest setting aside 5% of your take-home pay for unplanned expenses.
And once you have your contingency savings in place, it’s a good idea to turn to saving for short-term expenses that pop up unexpectedly. Who hasn't been invited to a wedding – or several? Cracked the screen on a smartphone? Punctured a tyre? Setting aside 5% of monthly pay can also help with these "one-off" expenses.
Top tip
Think of saving for your emergency like paying a regular bill every month. This way you can build up these contingency savings. We suggest you should aim to have at least one months' income, but ideally between three and six months' income saved.
Your budget should cover contingency savings set aside for any unexpected events, for example a car breakdown or a leaky roof. Start by aiming to save the equivalent of one month’s income. Eventually saving ideally three to six month's income to prepare you and your family for the unexpected.
A quick summary on budgeting
- Look at your income and outgoings and make a plan, keeping our 50/15/5 rule in mind
- Be prepared for the unexpected, build up an emergency fund
- Review your budget regularly, especially when life events happen.
*The Fidelity Global Sentiment Survey, 2023.
The sample consisted of respondents with the following qualifying conditions: aged 20-75, either they or their partner were employed full-time or part-time and had a minimum household income of: Australia: A$45,000 annually; China: RMB 5,000 monthly; Hong Kong: HK$15,000 monthly; USA: US$20,000 annually; Canada: CA$30,000 annually; UK: £10,000 annually; Mexico: $4,500 MXN monthly; Ireland: €20,000 annually; Germany: €20,000 annually; Netherlands: €20,000 annually; France: €20,000 annually; Italy: €15,000 annually; Spain: €15,000 annually; Japan: 1.5m yen annually; Brazil: R$1,501 monthly; India: ₹55,001 annually, Singapore: SGD$2,000 monthly; Denmark: 100,00 DKK annually; South Korea: 1m KRW monthly; Switzerland: 20 CHF annually; KSA: 4,000 SAR monthly; Sweden: 180,000 SEK annually; UAE 29,000 AED monthly; The data collection, research and analysis for the above markets was completed in partnership with Opinium, a strategic insight agency. Data collection took place in July 2023. Reporting and analysis took place between July and October 2023.