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How to budget in 60 minutes

Calculating your financesIf you don't get a kick out of using spreadsheets, you probably don't enjoy budgeting. However, you can fudge a budget in 60 minutes. This is how.

Fudging it won't work if your basic outgoings aren't being covered by your income but, if you're just a bit careless with how you spend your money, this method could work for you.

Step one

Firstly, get your last 12 months of bank account, savings account, and credit-card and loan statements.

Loans and some savings accounts come with annual statements only, so make estimates based on your last statements alongside your monthly contributions, for example if you received your last loan statement six months ago and it showed £3,000 debt outstanding, and you're paying £150 per month, you've got roughly £2,100 debt left today plus interest.

Step two

Add up how much money is in your bank and savings accounts. Let's say for example this comes to £2,000.

Step three

Add up all your existing credit card and loan debts including overdrafts. Let's say that's £5,000.

Step four

Deduct the figure in step three (£5,000) from the figure in step two (£2,000). You therefore have  £3,000. A negative figure isn't necessarily a budgeting problem.

Step five

Now repeat steps one to four using statements from 12 months ago. Let's say that a year ago the total in your current and savings accounts was just £1,000 and your total debt was higher at £7,000. So 1,000 minus 7,000 equals -£6,000.

Step six

Deduct the total from step five from the total in step four. That's -3,000 minus -6,000 = +£3,000.


Confused? A negative number minus another negative number makes the resultant number bigger or more positive. You can do this easily on a calculator:

1. Type “3000”

2. Press the “+/-” button to switch it to negative 3000

3. Press the “–” button to deduct the following number

4. Type “6000”

5. Press the “+/-” button to switch it to negative 6000

6. Press “=”.

If you finish with a positive number, such as +£3,000 in the above example, that means you are now richer than 12 months ago. In this example, you have £1,000 more savings and £2,000 less debt, so you're £3,000 better off. That's great news: you spend less than you earn.

You can still try to improve on that by reducing your costs, but if you have a negative figure it's rather more urgent: this means you spend more than you earn...

Step seven

Take a look through your bank and credit-card statements. Look for large outgoings and look for trends. You’ll likely already have a feeling for the areas where you are spending too much, so face up to whatever your indulgence is and work out how much it is you’re spending on it every month. Even if you don’t want to give it up, be brave and assess how much you’re spending; it might shock you into making a change.

If you make lots of cash withdrawals and don’t know where the money is going, either keep the receipts or consider spending on your debit card for a trial perios so you can see exactly what was spent and where when you check your bank statement. Or if you want to estimate it more quickly, then try our cost calculator tool.

Step eight

After checking your statements you may need help making cuts. Here are some tips to get you started:

  • Live frugally - for one week. Clear your diary, make your own coffee and sandwiches, and use your bike to get around. A bit of frugality could do you some good, and show you that we don't always have to live in luxury. Try to do this once a month. See how two reporters got on with a similar money-saving challenge.
  • Think about your three biggest expenses and what you could do to reduce them. If you rent, could you search for a cheaper flat? If you have a car, do you need it, or could you get one that is cheaper to run? Can you switch down from premium to normal brands or from normal to budget products? And can you be more organised and go to a cheaper supermarket rather than dashing into an express store on the way home from work? See how much more expensive it is shopping in Tesco supermarket vs. Tesco Express here.

Step nine

Stop relying on your credit card. They are great if you use them properly but if you don’t pay them off and fall into the minimum monthly repayment trap then you’re just costing yourself more money.

Step ten

Finally, every year take 60 minutes to see where you are financially compared with the year before by following the method above. You should notice a large drop in expenditure. If you keep spending too much, then fudging it isn't working, and you should put more effort in to refine your budget further, or even get assistance on halting your debt growth from a charity such as National Debtline or Citizens' Advice.

We all know that feeling when a week before payday you're already out of cash, and often it's the little things that add up and sting us. With our cost calculator tool you can get an idea of how much you might be spending on bits and bobs.


Neil Faulkner

Neil Faulkner

Neil Faulkner waded his way through a mountain of claims as a paralegal before moving on to be an insurance consultant and claims manager. He is a long-term investor, and one-time property owner and landlord. He writes about property, investing, insurance, consumer issues, and helping people get out of debt misery.

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