It is Saturday and you have just been paid £24 for two afternoons stacking shelves at the corner shop. By Wednesday it has vanished and you cannot remember where it went. A budget stops that mystery — it is a plan you make for your money before you spend it.
Income minus expenses
- Income is money coming in: pocket money, a Saturday job, Eid money, birthday gifts.
- Expenses are money going out: bus fares, snacks, phone top-ups, saving for trainers.
- If income is bigger than expenses you have a surplus (money spare). If expenses are bigger you have a deficit (you run short).
Fixed vs variable costs
| Type | Stays the same each month? | Examples |
|---|---|---|
| Fixed | Yes, predictable | Phone contract, gym membership, bus pass |
| Variable | No, it changes | Snacks, days out, clothes, gifts |
Variable costs are where most people overspend, because a few small buys quietly add up. A £1.50 snack every school day is over £7 a week and roughly £30 a month — enough to notice, yet easy to miss unless you write it down.
Tracking your spending
- For one week, jot down every single thing you buy — even a 60p drink.
- Add up each group at the end of the week. Most people are surprised by at least one number.
- A budget built on real habits works; a budget built on hopeful guesses does not.
When money is tight and you are heading for a deficit, adjust the variable costs first, because those are the ones you can actually change quickly: swap the bought lunch for a packed one, or skip one trip out. Fixed costs like a contract are harder to move mid-month, so they are a longer-term decision.
The 50/30/20 rule
A quick starter plan: put 50% of income towards needs (things you must have), 30% towards wants (things that are nice), and 20% into savings. On £24 that is £12 needs, about £7 wants and about £5 saved. It is only a guide, not a law — if you have almost no needs to pay yet, you might save far more than 20%, which is a brilliant head start.