UK finance jargon - in plain English
A plan for how you'll spend and save your money.
A budget is a plan that maps your income against your spending. It helps you decide in advance where your money goes rather than wondering where it went. One common budgeting framework is 50/30/20: 50% of take-home pay toward needs, 30% toward wants, and 20% toward savings. It's a starting point, not a rule. What matters is that the plan reflects your actual life.
Your take-home pay is £2,400 per month. Using 50/30/20 you'd put £1,200 toward rent, bills, and food; £720 toward hobbies, eating out, and subscriptions; and £480 straight into savings. The first month you do this properly is usually a bit of a wake-up call. Most people find one category much higher than they expected.
Numbers simplified for illustration. Your figures will depend on your income, outgoings, and circumstances.
People build a budget once and never look at it again. A budget only works if you track actual spending against the plan. The tool doesn't matter, whether that's a spreadsheet, app, or notebook, but the habit does. Check in at least once a week, especially when you're starting out.
Based on the 50/30/20 framework popularised by Elizabeth Warren. Treat these figures as a starting point only. The right split depends on your income, location, family situation, and financial goals. This is not personalised financial advice.
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