How much Shall I set my Spending Budget to?

It can be tricky at times actually working out how you should set your budget. Obviously, the specific amounts that you set, will very much depend on what your specific financial situation is, but there are things that you can do which will help you to decide what it will be, that can apply to everyone.

Work out How Much Comes in

You will need to start by calculating how much money you have coming in. That should not be too difficult as it is often the same amount. Look back at your recent bank statements and you should be able to see how much this is. If you pay varies, perhaps because you get paid per day or because you do not always work the same hours, then this could be a bit trickier to do. You could choose to take an average but it could be better to take the lowest level. This is because this is the worst case scenario and if you can budget for that, then anything extra you get, you will be able to do with what you please.

Calculate Costs of Essentials

The next step is to work out how much you spend on essentials. This is things that you have to pay for either because you need them, such as food and electricity or because you have a commitment to pay for them, such as loan repayments or mobile phone contracts. We do not always pay exactly the same out each month and so this can be tricky as well. It is likely that the amount that we spend on heating, for example, will be more in the winter and we go out more in the summer so spend more on that. It can therefor be a bit tricky. Like with income, it can be worth making a worse case scenario approach and planning for the most expensive months, then you will be able to be really confident that there will be enough money available.

Consider Keeping Some Back for Emergencies

It can also be worth thinking about whether it might be a good idea to keep a little extra money by just in case you get an unexpected expense crop up. This could be less necessary of you have some money in a savings account as that will be there if you need it. However, if you do not have any savings or very few, then it could be worth keeping a bit extra just in case. If you end up not having to spend it, you could then pop it in a savings account and start to build some up.

Once you have done all of this, you will then know how much you have left to spend on treats for yourself. This will obviously very much depend on how much your income is and how much you have spent out of it. Therefore, it is a figure that will be different for everyone. However, you may decide that you do not want to spend all of this but just a percentage of it and you want to work out how much that will be. It can be worth thinking about what you want to buy with it and whether you have any other financial future goals that you need to target. If you are looking to pay off a loan or put money in your savings account, then you may want to allocate some of the money there are therefore reduce the amount that you have to spend on non essentials. However, you need to get a balance as you do not want to feel like you are being deprived of things as this could make you go against the whole idea.


I am a finance writer and it is a job that I do with pride. I know that I have a responsibility in this job to make sure that I spread information and make sure that people are aware of what they can do to improve their finances. I therefore try to make sure that my knowledge is up to date and accurate and that I explain things clearly. I like to make sure that people can understand what I am saying and know what they need to do in order to make changes to their finances which will hopefully improve things for them.

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