Video transcript

Budgeting Explainer

Budgeting can be baffling, but you can be brilliant at it just by following these five simple steps. 

Ready. It's budget time. 

Step one. To work out a budget, you first need to know how much money you're starting with what's coming in each month. This is known as your income, earnings, salary, pay, gains. Kerching! 

Step 2. Now list the things you spend your money on each month and sort them into two buckets. Needs and wants. Think of needs as the things you need to pay for to survive. Food, bills, somewhere to live once are the things you like to splash out on but could live without take away or the latest phone.

Step three. You can now use those needs and wants to work out a monthly budget. One way of doing this is by following the 5030 twenty rule. This is where you split your income into three groups, 50% for survival, 30% for splashing out and 20% for saving. 

Step 4 Does it work? Put your budget to the test in the real world for a month. Did you miss anything? Did any cost pop up that you weren't expecting? 

Don't worry, that's why there is Step 5. Be flexible. If your budget didn't work out this time, don't worry, it'll start again. Next time you get paid, work out what wasn't quite right and move things around a bit. And if things change a bit, don't forget to update it. For example, the pay rise. Well done, update your income. Going to need to save for a friend's birthday in the next few months. Up your savings. 

There you have it, You've set your budget so every month you'll know exactly how much you have to save, spend and splash. This means you can stay in control of your money, enjoy splashing out on the things you love and look forward to your goals for the future.