Spending within your means | How to make a spending plan | Barclays (2024)

What does it mean to spend within your means?

Spending within your means is, simply put, working with what you’ve got. Sometimes people don’t look too closely at their spending, even though it’s a big part of how to keep to your budget. By tracking your outgoings, it would help call out your spending habits and help you put your money elsewhere.

It’s worth budgeting beforehand to save yourself from impulsive and regrettable decisions – let’s explore some of the ways you can make the most of your income.

How to live within your means

Track your spending and set a budget

First, take a look at your expenses. Sometimes you don’t realise how much you spend until you note it down.

Before setting a budget, it’s good to track every transaction for two to four weeks beforehand. That’s where you can work out how much you spend on essentials like rent, bills, any loan repayments and food, as well as how you spend the money you have left over after that – your disposable income.

You can also use apps like the Barclays app to keep an eye on your spending with your phone, and monitor what you tend to spend the most on.

After you’ve worked out where your money goes, you can start setting your budget goals and figuring out what changes you need to make to achieve them. Is your goal to save more or pay off a credit card quicker? What things can you spend less on to free up money for that? Take a look at our budgeting guide for everyone.

Work with what you’ve got

Once you’ve worked out your disposable income, you can focus on reducing your spending to fit within your budget. You might want to set yourself limits with your disposable income – for example, not spending more than £20 a month on take-aways.

But it’s not easy cutting costs. The best way is to find substitutes – first for the wants, then for the needs. Is a 9am coffee non-negotiable? Do you buy lunch from your favourite café Monday to Friday? Try making a morning coffee at home or making lunch a few days a week – you’ll be surprised at how much you’ll save.

One of the easiest ways to trim your spending is waiting a while before hitting that ‘buy’ button. If you see something you like, do your research to see if you can find it cheaper anywhere else. Most fashion stores are seasonal – typically, clothes that are in store today will be on sale in a few months. For online shopping, search for discount codes or retailers that sell the same item for less.

Once you’ve started with the smaller things, try checking your monthly bills and subscriptions, and see if there’s anything you can reduce or cut out completely. For instance, your current TV package could include channels you don’t watch. There’s a lot more flexibility in mobile phone tariffs, so it’s always worth seeing if there’s a way to choose a cheaper option.

Don’t depend on credit

Credit cards are a good way of building your credit score, but it’s easy to fall into the habit of thinking about your credit limit as part of your monthly budget available to spend.

Credit card lenders can reduce your limit at any time, and you’ll need to pay back whatever you spend – this is typically more than what you borrowed because of the interest you pay.

If you want to make a large purchase, like a new washing machine, consider saving up for it instead of paying for it with a credit card. Saving up an emergency fund is also another way of avoiding those last-minute surprises that usually require immediate action.

So what now?

All habits, healthy or not, take some time to develop – create a realistic plan and do your best to keep at it.

Start with a trial period to understand what works best. You may feel comfortable to save more than you thought or to pay down debts quicker than you thought, so feel free to adjust things if you feel your budget can work better for you.