How to Create a Budget That Fits Your Lifestyle in 2026

Budgeting is an essential part of adult life. There are plenty of us who enter our twenties, quickly lose control of our spending, then shout from the hills: ‘We should have been taught this in school!”

And perhaps we should have. But it’s too late for that now. You need to navigate a minefield of standing orders, direct debits, and weekly food shops to make it to your next payday unscathed.

If you’re at a loss and desperately wondering where to start when it comes to budgeting, then worry not. In this article, I’m going to show you how to construct a budget that actually fits your lifestyle.

What’s the Damage?

Before you boot up Excel and start thinking about your budget, the first thing you need to do is get the lay of the land when it comes to your current outgoings. Take a look at your bank statements for the past two months and note down your regular standing orders, direct orders, and regular payments that you need to factor in.

Split your payments into the following groups:

• Housing: Mortgage or rent payments, council tax, and utilities
• Food: Regular food shops and eating out
• Transport: Car payments, insurance, or train tickets
• Subscriptions: TV streaming, gym memberships, and gaming subscription services
• Disposable Income: The money you spend when seeing friends, shopping, or on holidays

When you’re giving yourself this audit, you may well come across lots of different ways to save money – maybe there are unused subscriptions that you can cancel, unnecessary takeaways that you can cut, or more cost-effective ways of commuting to work. Either way, now you have a starting point.

The 50, 30, 20 Rule

Now you can open Excel and tot up a refined list of all of the regular payments that you’ll make through the month. With everything there, organise your monthly spending into three areas: needs, wants and savings.

The goal here is to have a budget in which 50% of goes on needs (essential living expenses), 30% goes on wants (discretionary spending), and 20% goes into savings or debt repayment.

Your mileage may vary – this isn’t exactly an iron-clad rule that needs to be the same for everyone. Some might be living in a flat share and have lower ‘needs’, while others might be saving for an upcoming wedding and be putting away more into savings.

You should avoid dipping into savings unless absolutely necessary. Ideally, savings should never be used for spending or bills, only for specific goals or if sudden costs arise, like legal fees – you never know when you’ll need to make multiple injury claims with a firm like Bond Turner.

Set Spending Limits

Set spending limits based on your needs, wants and savings, for instance, saying you can spend £400 on wants this month. Make sure that you base these limits on your actual spending history and priorities, rather than unrealistic fantasies.

Final Thoughts

Too many young adults are completely unequipped to handle the reality of monthly spending, which isn’t a huge surprise, considering they’re completely new to it. But having a monthly budget is a great way to regulate monthly spending and save for rainy days, you never know when a nasty trip to the dentist or a phone call to personal injury solicitors in Liverpool might be around the corner.