10 Sep 2020 • 4mins • Fonk

How to budget for your ideal future

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Your ideal future could include having a baby, getting married or buying a house. Or it may be retiring early, travelling the world or living in luxury. Whatever it looks like, planning ahead might bring it closer than you think.

It can be easy to get overwhelmed by money, especially when you’re trying to juggle spending and saving for now and down the road. We like to think about budgeting and saving like building a staircase (bear in mind we’re not actual carpenters). Each step represents a different life stage. You’re probably not going to leap four steps in one go, so you won’t need all of your future money right now. Planning for the future is about preparing for each step as it comes.

Starting now

The first place to start is with what you already have. Look at how much you’re paid each month and what your outgoings are.

Francesca from The Money Fox – a blog all about using money to create your dream life – advises “using realistic numbers. You can find out how much you are actually spending (rather than the number that you have in your head) by tracking your spending. Use these numbers to create your budget and adjust as necessary. And keep things in the budget for having fun!”

Timi Merriman-Johnson, founder of financial education platform Mr MoneyJar, agrees. He says:

“My top tip on budgeting for your ideal future is to make sure that when you budget, you write down what you actually spend on stuff, and not what you wish you'd spent. This means that if you spend £100 a month on takeaways, you make an honest record of that. It is then up to you to decide on whether you would like to cut back on your spending in this area, or leave it as is.”

So, honesty really is the best policy when it comes to getting started with your budget.

Taking control of your spending

Now you know the numbers, you can start looking at what you might have left over and how much you could stash away for the future. The Yolt app will do all the tracking-your-spending legwork for you, and give you a handy weekly snapshot to show how you’re getting on. Plus, you can easily group your spending into categories – like bills, eating out, transport, groceries, rent etc. – and set individual budgets for things.

Sam Jefferies from Money Nest blog is helping to improve the financial lives of 20-30yr olds. His top budgeting advice is to “use two bank accounts, the first one for day-to-day spending and the other for everything else (e.g. rent, monthly bills etc), and match the amount in the first one to your monthly day-to-day spending limit. This way you'll have a clear idea of your finances and exactly how much you have left for the month.”

Setting a saving target

It can be tricky to get saving-motivated for things way in the distant future. Setting up a saving goal in the Yolt app could be the cheerleader you need. Not only will it remind you of your saving steps, but you can also see how your money’s mounting up. And we’ll be cheering you on every step of the way. Check out our Jar Boosters to give your savings a little growth spurt – from The Round Up to help you squirrel away your change, to The Cashback Collector, giving you cashback from the brands you love.

Your ideal future could be a reality sooner than you think (within reason), and it doesn’t have to be an uphill struggle. Once you get into the saving habit, you’ll be automatically topping up your rainy-day fund and smashing your savings Goals.

Want to know how to create a saving habit? Check out our article on the psychology of saving.