Look at how much money you have coming in on a regular basis. This will primarily be your salary if you're working. If your income changes from month to month, work out the average over the last 3 months.
Then, looking at your bank statements for the last 3 months, work out your average monthly spend. It can help to categorise your expenses so you can see specific areas where you may be overspending.
These categories may include your ‘needs’, which are regular outgoings like:
- rent or mortgage
Plus your ‘wants’, such as:
- eating out
Then note any money you’re putting towards:
Once you know how much you’re spending in each area, you can work out the percentage:
- Divide the amount you’re spending on needs per month by your monthly income. For example: £750 ÷ £1,500 = 0.5
- Multiply that number by 100. For example: 0.5 × 100 = 50%
Once you’ve worked out the percentages, look at how they compare. Again, it’s okay if your spending doesn’t fit the 50-30-20 rule. But, if you’re looking to save more, or repay debts faster, you may be able to make some changes.
If an unexpected expense has knocked you off track one month, don’t worry. Just try to get back on track the following month. It can be helpful to have a safety net to cover unexpected costs.
Explore: How to avoid spending you’ll regret