12 Days Of Finance, Day 3: Say Goodbye to Overspending: Stop Budgeting the Wrong Way

In this festive episode, we’re offering all the tips you need to master your money in 2025—without sacrificing the fun. From breaking down budgeting methods that actually work to showing you how to track every penny (even in a cashless world), this episode is your ultimate guide to balancing smart spending with guilt-free enjoyment. 💸

Here’s what we’re unpacking:
• The 50/30/20 method and why it’s a game-changer
• Zero-based budgeting for ultimate money control
• How to adapt the cash envelope system in today’s digital world
• Our fave budgeting tools—pen and paper, spreadsheets, apps, you name it!
• Why monthly budget reviews keep your money aligned with your life
• Automating your savings for a stress-free future
• Clever ways to categorise expenses for crystal-clear visibility
• And, of course, creating a fun fund to treat yourself guilt-free!

Prepare to make budgeting simple, stress-free, and even fun!

Chapters

• 0:00 Mastering Budgeting
• 7:58 Indulging in Christmas Feasting

Transcript

Speaker 0: 0:00

Hey guys and welcome back to the Penny Sopans podcast with your host, kia, and this is a podcast where you aim to dispel your myths, simplify difficult, fast jargon and rectify your own personal problems. Merry Christmas, everyone. This is one of my favorite days of the entire year because I eat so much. I'm able to relax. I love Christmas television. It's honestly my absolute favorite. So I promise you, whatever you're doing on Christmas day, I hope you have an amazing one, whether you're with family, friends or riding it solo. I hope you have a great day. I'm only gonna be here for 10 minutes. I promise you I'm gonna let you get back to your regular programming. Whatever you're doing today, I just wanna help you on this 12 Days of Finance series that we've got going on we've got going on.

Speaker 0: 0:43

Christmas day is no exception. We're still talking about money, but we're going to have a good time today. But today it's all about how you can budget like a pro, and one thing I'm good at is putting together a good budget. So if you are in need of knowing how to put together a good budget, you're in the right place. I hope you like my little Santa hat. If you're watching this one, hey, I'm giving you the Santa inspired budgeting tips today. So in the next eight to 10 minutes we're going to be talking about all the things that you need to do to craft perfect budget for the new year. Number one is to figure out your budgeting method. There are so many that you can pick from, but I say the main three that I'd say you should consider either the 50, 30, 20 rule, which is basically where you have 50% of your income goes to your needs, so that's your rent expenses, anything else you need to pay for. 30% of your income goes to your wants, so that is you buying new clothes, new trainers, new whatever and then 20% goes into savings and investments. That is one good way. If you're not sure how you should divvy up your money, start seeing your money aside.

Speaker 0: 1:34

Then you have the zero-based budgeting system and this is my personal favourite, and this is as it sounds where you budget your money down to the last penny, and I love this because I literally know where every single penny is going. So I personally have my income allocated, my expenses all the way down to subscriptions, fixed costs, variable costs. Even in my budget I include occasions like someone's birthday, so if I need to put money away for a present or if I need to put money away for an outing, I've got all of that in there and I budget my money down to the last penny. No penny is left behind, and that's my personal favorite. Then you also have cash envelopes, which has kind of grown in popularity over the last two years, and that is where you have envelopes dedicated to specific things. So I find, if you are someone who's maybe new to budgeting, I almost do that, but not with envelopes with physical debit cards, and the way that I do it is.

Speaker 0: 2:25

I have I think I have about nine bank accounts now nine or ten, probably more, but nine that I can think to mind and I'll maybe pick about four of those and it will have money in there allocated to certain things. So I have one bank account where all my bills come out from. Everything is set up to come up from that one bank account. Then I'll have another one where maybe it's my shopping fund and all my shopping comes out from there. Then I might have another one where maybe it's my shopping fund and all my shopping comes out from there. Then I might have another one where my subscriptions come out of. Then I'll have another one which might be just dedicated towards savings, and then my money sits in there. So that's essentially what the envelope method is, but just in cash. So people will have an envelope which is for their bills, another one for shopping or travel if you're going to work, another one for their savings, another one for another part, and it all depends on you how many envelopes you use and if you want to spend cash. I just find that we're really moving to a cashless society now that I've been into many shops where they will not take cash at all. So I personally like using that method, but doing it in a bank account way. So whichever method you think best suits you and your needs, pick the method and that is what you're going to do, moving forward when it comes to budgeting your money.

Speaker 0: 3:23

Next up is you're going to pick how you're going to budget. There's a plethora of ways, but for me, I personally love a good pen and paper. I like feeling in tune and in touch with my budget. So I will literally write down everything income, expenses but that is a lot of manual labour, going through and figuring out how much do I need to pay for this? How much do I need to pay for this? How much do I need to pay for that? I like it, but it's not for everyone.

Speaker 0: 3:45

So probably the most popular way is using spreadsheets. We have one on the Penny to Pounds website that you can get, and all you do is you fill in the spreadsheet with the numbers that you have and it will automatically add everything up so you can see how much money you have and where it's been allocated to. That's probably the most popular one. When I speak to people, they use spreadsheets. And then, lastly, there are apps out there that will act as your budget best friend. One of my personal favourites is Emma, and Emma will help you to connect all of your accounts together, see where all your money is going, and then you can work out a budget using the app. So, whichever you choose, pick one that's going to suit you. I would say, if you haven't really got a preferred method, try all of them. I think pen and paper is probably going to be the least favourite, I understand, but definitely try a spreadsheet and try an app and see which one best suits how you like to see your budget.

Speaker 0: 4:30

Next up is to review your budget monthly. The reason why I say this is even if you are on salary. So your salary means that you get the same amount every single month, probably at the same time every month. Even though that's the same, how you spend may vary and your lifestyle might vary. I know that things can spring up at any point, so even though I might be spending X amount on one thing, I might now need to quickly re-divert money to another point of my life, which now means I need to review where my money's going. So review your budget every single month to make sure that it's still aligned with your lifestyle and what you need. I always try and emphasize that personal finance is just that it is personal. So what I do versus what you need might be two different things. So you need to make sure that your budget is still aligned with what you want, with your life.

Speaker 0: 5:14

And then, lastly, some additional tips to help you to master budgeting is to number one automate your savings. This is something that I love to do because it makes it so much easier. You can set it up and completely forget about it, so all you do is you can do it in a number of ways. There are apps that allow you to set up regular transfers. It might be once a week, once a month and you put money away into a specific account, or you can go back to basics and, with your bank account, you can set up something called a standing order. Now, a standing order is essentially a set of instructions that you tell your bank and you say move money from one account to another designated account, and you can do that with anything. The accounts can be within the same bank or within different banks. I've got the same one. I will talk about that I set up at 16, 10 years ago now. I've got the same one I always talk about that I set up at 16, 10 years ago now, to move money from one of my accounts into another account with another bank Five pounds every single Friday, and that still goes to this day. So I allow my money to just grow there. And obviously I have additional standing orders set up as well as other automated savings. But that's just one, a legacy one that I've kept and I'd love to refer back to you, because you set it up once and you can completely forget it, like until I do episodes like this where I talk about it. I forget that that five pounds gets moved from my main account into another savings account that I have On top of that.

Speaker 0: 6:30

Categorize your expenses. I find it easy if you break it down. If you, for example, you have bills and then you have subscriptions, you have anything else that you might spend travel, transport, whatever it is. Break it down into categories, because if you do that, you can see what category you're spending more on, or maybe what you're spending less on and where you can make changes. And the one I want to end on, which I think is so important, is to have money in a fun fund. Put that as part of your budget. Allocate money towards having fun. Make sure you've covered your bills first. Make sure you put money into savings and investments first. With whatever's left over, allocate money to fun.

Speaker 0: 7:05

When it comes to personal finance, it shouldn't all be doom and gloom or I can't spend any money because I'm putting it all into savings or investments for my future. Life is too short and I do 100% agree that you should enjoy yourself. We should do it smarter, which is why we have our fun fund. That is a part of our budget. We allocate money to fun, and a great part about it is that, if you've allocated a hundred pounds for the month. You know right, I've only got a hundred pounds to spend. So if my friend asked me to go out one weekend, another on another weekend, I either pick one to go to or I go to both, but I spend less on one. So, for example, if one's dinner, one's dinner and one's drinks, maybe I'll go to the dinner, I'll spend money there, but then drinks, I'll drink some. I'll have a few drinks at home before I go out, so I only buy one when I'm out. It allows you to plan smarter, not break the bank, and stay within your budget. Budgeting will become a normal part of your lifestyle and hopefully these tips help you to master and become a budgeting pro that I know you can be.

Speaker 0: 7:58

And with that all being said, I hope you have an amazing Christmas day. Whatever you are doing, please eat to your heart's content. For me, I am going to go and just gorge. I can't wait. Christmas is the one day of the year where I eat everything and I feel no remorse, I feel no guilt. I just eat my heart away. So I hope you enjoy whatever you're doing. Have a great time. Let me know in the comments what you're doing for Christmas, because I'd love to know and I hope you have an amazing day and we're back again tomorrow with another episode of the 12 Days of Finance. Bye, guys.