Budgeting in 2025: How You Can Save Money

Hey there! If you’ve ever felt overwhelmed by bills or worried about not having enough savings, you’re not alone. I’ve been there too, and to be honest I still am from time to time. Anyway, that’s a sob story for anyther time, I’ve discovered that having a clear savings plan—and making sure I pay myself first—is one of the best ways to stay on top of your personal finances in the UK. You may have heard about “paying yourself first”, and probably wonder what the heck does that mean, but don’t worry, I’ll explain everything for you!

The goal here is to make it less complex for you, and to make sure you are on the right path.

In this post, I’ll walk you through my simple, beginner-friendly approach to save money in 2025. I’ll use a real-life example (salary, bills, and all) to explain how it works. Plus, I’ve included extra resources, and even a 52 envelopes system to keep your savings organised, as it may work for you better. Obviously we are going for the more “extreme” approach here, like saving for a goal for example. Alright, let’s dive in!

1. Know Your Take-Home Pay

Begin by figuring out exactly how much money lands in your bank account each month—this is your net (after-tax) income. For this example:

• Yearly salary: £40,000
• Monthly net (after-tax): ~£2,680

Why This Matters:
Every effective budgeting or save money challenge begins with knowing exactly how much you truly have to work with. If you’re unsure about your deductions, try using an online calculator such as this Tax Calculator for a more accurate figure. Now I want you to check your payslips EVERY SINGLE MONTH, make sure YOU are in control, I also need you to take accountability and start checking your bank account regularly.

2. Identify Fixed Expenses

Next, list all your non-negotiable expenses—things like rent, utilities, and essential services. In my case, that looks like:

• Rent & shared bills: £950
• Internet: £30
• Mobile phone: £10

Right from the start, £990 is set aside to cover these basics.

Pro Tip:
Set these bills on auto-pay (direct debit) so you never miss a due date. This simple trick helps you save money and avoid surprises later in the month. Otherwise, you can always add a calendar alert on your phone but you need to commit to never skipping the alarm and pay as soon as you see it.

3. Pay Yourself First

This is the real game-changer. Decide on the amount you want to save before spending on anything else.

Before you commit, work out a realistic figure for your monthly spending. For example, if you work from home like I do, you might have fewer commuting costs. Let’s say:

• Personal spending (groceries, small treats, etc.): £500

This category covers all your day-to-day expenses—food, the occasional takeaway, a little entertainment, etc.

Pro Tip:
Break that £500 down into weekly amounts (approximately £125 per week) to help avoid overspending early in the month. You could always use another account, and send yourself every week £125, a bit like pocket money.

4. Calculate Your Savings

Now, let’s see what’s left:

Monthly take-home: £2,680
Less Fixed Bills: £990
Less Personal Spending: £500
Equals Savings: £1,190

This £1,190 is what I save immediately—transferred to a separate savings or investment account at the start of each month. This ensures you always prioritise saving money over discretionary spending. Obviously, we are saving for a goal here, I told you I’m going for the extreme approach there, but you can always readjust according to your needs.

How Much After 12 Months?

£1,190 × 12 = £14,280

Imagine having £14,280 saved by the end of the year—a straightforward and effective plan!

5. Quick Reference Budget Table

Sometimes it helps to see everything at a glance. Here’s a simple breakdown of my monthly budget:

Category	Amount	Details
Net Income	£2,680	Your monthly take-home pay
Fixed Bills	£990	Rent (£950), Internet (£30), Mobile (£10)
Personal Spending	£500	Groceries, small extras (~£125/week)
Savings	£1,190	Automatically transferred to a separate account

Use this table as a template. If your income or bills differ, simply plug in your numbers to see how much you can realistically save.

6. The 52 Envelopes Method (Alternative)

To further enhance your savings strategy, consider using the 52 envelopes method. This technique is a practical, tangible way to manage your money:

• Step 1: Label 52 envelopes—one for each week of the year.
• Step 2: Allocate a portion of your savings each week into a designated envelope.
• Step 3: This method not only helps you track your progress but also challenges you to save money every day.

This approach pairs well with digital solutions you could create a personalised pot on Revolut or Monzo and definitely do that and monitor your weekly deposits and watch your savings grow. I am adding this one here, as I know that for some people it may work better. Personally I don’t use this method, I prefer to transfer my savings into a ISA, an Investment Account or some savings account I keep on the side.

7. Why My Approach Works

• Pay Yourself First:
  By transferring money into savings immediately, you’re building a financial cushion each month rather than waiting to see what’s left over.

• Clear Weekly Limit:
  Dividing personal spending into weekly amounts (about £125) helps prevent impulsive splurges.

• Stress-Free Structure:
  With fixed amounts allocated for bills, personal expenses, and savings, budgeting becomes almost automatic—allowing you to save money and get interest on your savings in the long run.

8. Extra Reading & Video Resources

If you want to dive deeper into saving money in the UK, here are some free articles and videos that can help:

• Yahoo Finance:
  Just to keep track articles on household budgeting, inflation, and tips to save money effectively. why this one specifically? Because I stay away from newspapers that stress me out and constantly tell me the world is falling apart. The less mental space you give to those inflammatory articles, the more space you have to focus on yourself and your goals.

• YouTube Channels:

  • The Financial Diet: Offers practical budgeting tips, meal planning ideas, and lifestyle changes to help you save money as a student or manage everyday expenses. This one was the channel that taught me everything about saving.
  • Graham Stephan: Although his focus is on investment and finance, his videos also cover useful strategies for investment, tips and more. Although this one is more for entertainment purposes.

For additional inspiration, search for “save money challenge” or “budgeting for beginners” on YouTube to find how-to videos, trackers, and motivational success stories.

9. Making It Stick

• Automate Your Savings:
  Set up a standing order from your main account to your savings account on payday. This way, you always save money without touching it.
• Stay Flexible:
  Some months might have extra expenses—car repairs, birthdays, etc. Adjust your plan slightly, but keep the overall goal intact.
• Review Regularly:
  Every 3-6 months, revisit your budget. If your bills have increased or you can switch providers to save money on energy bills or save money on subscriptions, make those tweaks. Small adjustments can lead to significant gains over time.

Final Thoughts

Budgeting isn’t about deprivation; it’s about giving every pound a purpose. By allocating funds for bills, personal spending, and, most importantly, savings, you can pay your bills, enjoy life, and work towards big financial goals—whether it’s a deposit on a house, building a comfortable emergency fund, or planning a well-deserved holiday.

By choosing to pay myself first, I’m on track to save £14,280 in one year while living in London. Follow a similar plan, adjust it to suit your own numbers, and explore the recommended resources along the way. You’ll be amazed at how quickly your savings can grow.

Good luck on your budgeting journey, and here’s to a more financially secure 2025!

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