How to start a budget and why it's important

Your goals, definitely. A budget is simply a plan to flow your money towards what you want, to live your best life. Budgeting helps for many reasons: to make sure we don't spend more than we earn, that we have enough for bills, to make ends meet. But the key thing with budgeting is to make a surplus – to have extra money left over and not a deficit. Once you do, you've got money to aim at whatever goals you'd like to set. Here's where to start your budget.

Using a budget to plan your spending and sticking to it not only helps make ends meet, it enables you to reach goals for the short, medium and long term. Most things we'd like to achieve in life take money, and that money needs saving if we want to avoid too much debt. Once you've got a surplus in your budget, you can make sure it gets saved automatically into separate accounts, where it can build towards what you want. To get you started on thinking about some goals today, here's our goal planner.

It helps to have a plan! To build a great budget that you can stick to, it helps to first know your numbers. By tracking your spending, you’ll start to see where your money is going, and you’ll be better placed to make decisions about where you really want your money to go. The key is to capture everything you spend for a month or two to get your full spending picture. There are several apps designed to track spending on the go. You can also download your past three months of transactions from your bank, which really helps to see the patterns. Here’s more on money tracking.

So we don’t follow random money tips from just anyone, it helps to get professional, independent personalised financial advice. (It doesn't have to cost an arm and a leg.) Here's our guide to getting advice. Whichever kind you need, it helps to shop around, meet with a few advisers and find a good fit. For advice about debt and budgeting, you can discuss your situation – even anonymously – with the team at MoneyTalks, which runs a free helpline. Easily chat online, call 0800 345 123 or text 4029 today.

The classic "envelope" or "jar" technique helps give every single dollar a job to do. (Sorted's budgeting tool is a digital version of this.) With this way of budgeting, you add up your incoming money and then divide it into the different categories you need to spend on, like your regular expenses (rent, mortgage, phone, power, insurance) and your irregular ones (like food or petrol, which can go up and down). Here's our budgeting tool so you can start your plan today.

Incomes can be lumpy when you're a freelancer, depending on the gig or the project. To start, it helps to figure out the minimum amount of money you'll need to meet your expenses. When you've worked out what you need to get by, you then know that what you earn above that amount each month needs a plan. You can set aside a percentage that will allow you to make sure you're working towards your goals, even when your income goes up and down. Here's more for contractors.

Congratulations! Making a spending plan for when baby arrives is about budgeting for reduced income, and for the additional expenses that come along, like baby gear. Many couples find it helpful to do a test run on a single income before baby arrives. This gives you an early perspective on your expenses and any adjustments you need to make. Here's more for when you're planning for your new arrival.

It's pretty competitive in the world of companies who provide us things like power, internet or phone service. But when one of them suddenly lowers their prices, we might not hear about it. So it helps to review our providers at least once a year. Because new players and new offers come along regularly in these industries, we could save hundreds by reviewing and switching to better deals out there. How much difference would it make in your budget?

Budgets are for spontaneous people too! The trick is to have money for those spur-of-the moment expenses as part of your spending plan. Knowing what your limit is takes the guesswork out of it, but it also gives you the flexibility you need. What's most important is that you make a plan that’s right for you. Here's our budgeting tool to start your plan today.

Rent will probably be your biggest ongoing cost when you’re flatting. You can look online to get an idea of typical rents in your desired location. Then, using our budgeting tool, you can work out how rent will fit into your overall spending plan. You’ll also typically need to plan to pay a bond of up to four weeks’ rent, plus two weeks’ rent in advance, so you’ll need to budget to save up. Ideally it would be good to keep your rent to 30% or less of your entire budget, and all your living expenses to 50% or less, but that’s not always possible.

More couples these days seem to be managing their money separately, which is good for each person’s autonomy and independence, but not necessarily for communicating. It’s so important to communicate well about money in a relationship. And while it’s only natural to have differences of opinion, getting on the same page brings many opportunities to get ahead financially that we wouldn’t have on our own. Here’s more for when you’re planning with your partner.

Probably. Having a separate account to funnel your savings into helps it grow and not get mixed in with all your other spending. And the more automatic and out of sight, the better. We’re guessing you’re not just saving for the fun of it, but for goals you want to achieve. Having separate accounts for each of your targets is also useful, not only because you can more easily track your progress, but also in case you need to look at some other investment options for one or other of your goals (like term deposits for the short term, a managed fund for the medium term). Here are more goal-setting ideas.

Beyond looking for a side hustle to earn more, it may be time to make some cuts. Trying to sustain the same lifestyle after taking a hit to your income can be extremely challenging, and it’s good to be realistic about whether this is even doable. Unless you have an accurate picture of your incomings and outgoings, you could end up in a difficult debt spiral. Here’s where to see your current situation clearly and make a new plan.

Planning your spending in the near term is one thing (here’s our budgeting tool for that), but making long-term plans for goals that are decades away, like retirement, is quite another. Even if it feels so far away, it’s never too early to put some plans in place. Here’s where to start when you’re looking ahead and thinking about your future lifestyle.

Congratulations! There are so many beautiful and memorable ways these days to celebrate your wedding in your style, on your budget. Because you can now have multiple budgets in Sorted’s tool, you can easily create a separate wedding plan (or even more than one, to work out different options for your special day). Start by listing every item, from invitations to flowers to the dress. Here’s where to begin.

There are many rules-of-thumb budgets out there, like the "50-30-20" rule for needs, wants and savings. But people’s situations are far more varied, so this one doesn’t necessarily work for everyone. Your needs might not be covered by 50% of your income, or 20% on savings may not be enough – depending on what you’re aiming to achieve. What's most important is that you make your plan to suit your circumstances. Here's our budgeting tool to start your plan today.