Using a budget can help you take control of your financial state to reach your personal goals. Read on to find out five quick ways budgeting can help you on your journey to financial recovery.

A budget is a spending plan that is unique to you; it will show you all your income and expenditures to show you how much ‘disposable income’ you have left.

Creating a detailed budget plan will give you a better understanding of your financial situation as it will help you identify where you can better manage your expenses to achieve your goals. Below are five ways budgeting can help you:

Couple working out their budget


Disposable income

Cabot Financial states that disposable income is the amount of money that you and your family have available for spending and saving after direct taxes (such as Income Tax, National Insurance and Council Tax) and all outgoings have been deducted. It includes earnings from employment, private pensions, and investments as well as cash benefits provided by the government.

1. Keep on top of your spending

Budgeting will give you the feeling of being in control over your money. It will allow you to track your spending so you can see where you might be able to save on expenses. Having the knowledge of what your money is doing can give you the confidence to make better financial decisions for your future.

To help you stay on top of your spending, make sure you’re regularly reflecting on your outgoings, which can help you identify where you are spending money, if your purchases are essential, and act as a reminder to shop around for cheaper deals/tariffs on your utilities, and subscriptions.

2. Be prepared for emergencies

Everyone experiences unforeseen situations from time-to-time, whether this is a car breakdown, an unexpected bill, or an emergency home repair. Building a budget can help in the event of an emergency.

A budget won’t prevent the unexpected, but it can make the shock a little easier. If you can, build a small pot of money to fall back on. It can be a massive help through a tight spot.

A well-planned budget can also give you the knowledge of where you might be able to adjust your spending for your situation, allowing you to prioritise your money on the essentials.

Family putting money in a piggy bank


3. Building for your future.

Whether your goal is to become debt free, go on holiday, buy a home, or save for retirement, a good budget plan can help you.

Budget planner

A classic saving tip is to ‘save the change’. Some people, when they go out to spend physical cash, will save their loose change in a jar at home. Once the jar is full, they might take the cash to the bank, or use it for spending money on a family holiday.

Now, because a lot of transactions are digital, you could move the extra pennies or pounds to a separate savings account online. You’d be surprised how quickly all the change adds up, and you’d barely even notice the difference from your bank account! Sometimes bank accounts support this as well, so it’s worth checking out your bank’s app or digital offerings.

Saving money is a habit, and to keep motivated, it’s always good to keep in mind the financial goals you’re working towards!

If you’re still trying to set your financial goals, read our tips on things to consider when setting your goals.

4. Living within your means

By regularly checking your budget, it will encourage you to think more carefully about your spending and help you cut down on the knee-jerk purchases. Tracking your income and expenses can help you stop overspending and make sure your way of life is sustainable.

It’s important to be honest with yourself so you build an accurate budget that you can stick to. And yes, budgeting is a tool to help you manage your money but that doesn’t mean you can’t treat yourself from time-to-time. Check out our tips to start living frugally.

Remember, keeping to a plan doesn’t have to be strict - the best budgets provide a small wiggle room to help you when your circumstances change.

5. Have a better relationship with money

Everyone’s relationship with money is different, and how you perceive it may affect your long-term future. By keeping up to date with your finances, you can build a better understanding and make decisions that can benefit you in the long run.

Building a budget will give you the confidence and knowledge you need to take back control and help you to develop a good life balance. In 2021, StepChange reported that one in five people sought their help because of a lack of control over their finances.

Many people have a poor relationship with money, and it can affect their mental health. Having control over your finances won’t just help you to make better financial decisions, it will help to reduce your stress and anxiety. If you are struggling with your current financial situation and need some help, speak to a free debt advice charity.

Use our budgeting planner

If you’re a Cabot customer and you’re thinking of understanding your finances, the Cabot Budget Planner is an excellent tool to help you get started. The planner is free to use, and it can help you get to grips with your expenses so that you can create an affordable solution to clear your debt.

You will need to register or log in to your account to access our budget planner. Once you’re logged in, all you need to do is add in your income and expenditure into the planner, and the calculator will do the rest! It is really easy to use, and it takes the stress out of budgeting.  

Click here if you would like to see how to use Cabot’s budget planner.

Need support?

If you’re a Cabot customer and you feel like you’re struggling financially, it’s important to let us know. We can support you with a solution that will suit your situation and provide you with details of organisations that offer free debt advice and guidance.

Get in touch with us