How to budget for living in the UK

Living in England, or the UK in general, can be really scary. One of the biggest fears that most expats face is running out of money. It’s a serious concern and it’s not something to be taken lightly! From one expat in the UK to another, here’s how to budget for living in the UK and exactly how I make it work for me.

Find a software that works best for you

There’s tons of budgeting software available online – you just need to pick one! Some people prefer the classic pen-on-paper technique, while some prefer to pay for a professional program. It really doesn’t matter in the end, you just need something that you’ll continue to use.

Years back, I tried making my own budget in Excel but never kept up with it. It was also hard to see if I had made any mistakes and eventually I just stopped using it.

For the last few years, I’ve been using You Need A Budget and I haven’t looked back. While this software does have a monthly/yearly subscription fee, I’m more than happy to pay it for the peace of mind that I can track my money.

You can also try a free trial to see if it’s something that could work for you before committing.

Since using YNAB, I’ve learned exactly where my money is going, what I need to cut back on and how to plan for upcoming expenses. While it’s not ideal that I need to pay for this service (and that might put you off, too) I’ve found that the pros far outweigh the cons.

What should I budget for when living in the UK?

No matter what program or software you use, you’ll need to organise your budget. For me, I have everything separated into five main groups, with multiple categories within them. Please feel free to copy my budget layout, or adjust it to fit your own needs!

It’s also important to remember that certain parts of the UK are extremely expensive (London being one of them) so make sure to keep that in mind when allocating money.

How to budget for living in the UK

1. Home

Under my “Home” group, I have entries for:

These entries are some of the most important costs for my daily life and pretty vital that I have money available for them. Most of these are pretty self-explanatory, but “House Stuff” would be anything needed for the house, such as furniture, cleaning supplies, etc. “Health and Beauty” is what I use when buying any medicine or items prescribed from my doctor’s or any toiletries needed.

Basically, “Home” are all my main costs of living and the entries that should be budgeted for ahead of anything else.

If you’re looking to stay in the UK, it’s also helpful to put money aside for your next visa. We all know how expensive UK visas are be, so it’s really helpful to plan ahead. This category could include the price of the visa itself, plus the NHS surcharge, any solicitor fees, flights if necessary and any other application fees.

2. Savings

Under “Savings” I have two categories:

  • Pension
  • ISA (Individual Savings Account)
  • House Savings

Each month, I try my best to put money aside for these short-term and long-term saving accounts.

A word of caution: If you are going to be a short-term expat in the UK, I would be hesitant to open any pension or saving accounts in the UK. Some types of accounts are very strict about how much money you can take out and when. When you move back to your home country, you may find it difficult to get access to that money.

For us long-haul expats, I would recommend getting yourself set up with savings accounts as you’ll be in the UK for much longer.

If you’re not sure what to do, make sure to book an appointment with an advisor at your bank to discuss your options.

3. Quality of Life Goals

In this group, I budget for things like:

  • Flights for back home
  • Next holiday
  • New headphones
  • Tech repair

While these types of purchases aren’t necessary to live, they certainly make life more interesting. I make sure to add some extra pounds here and there to these accounts for future travel, entertainment and fun!

4. Car

While I currently don’t have a car, I probably will again in the future. In that case, I’ve left my “Car” entries for when I buy another car. Owning a car in any country is expensive, so it’s important to save for it!

  • Car tax
  • Car insurance
  • Fuel
  • MOT
  • Parking
  • Repairs/maintenance
  • New car

In many parts of England and the UK, it’s possible to get by without buying a car. I’ve also written about the comparison between public transport and buying a car in the UK if you want to learn more.

But for more remote areas, or if it’s difficult to commute to work, you might have to take the plunge and buy a car. I’m very lucky that I don’t need a car currently, but that’s likely to change in the future. In the meantime, I keep these car-related entries in my budget and throw some extra money in there from time to time.

If you are going to buy a car in the UK, make sure you switch over your license to a UK driving license as well.

5. Just for fun

Life can’t be always boring! In my “Just for fun” group, I budget for:

  • Dining out & takeaway
  • Clothing
  • Gifts & Christmas
  • Pub & Coffee
  • Entertainment

While buying new clothes and getting a takeaway pizza are not vital, it’s still fun sometimes. I’ve found that these particular entries are great to budget for and then I never need to worry.

Christmas also used to be a big stress for me and making sure I had money to buy presents – but not anymore!

Budgeting for life in the UK

Running out of money as a foreigner is a real fear, but it doesn’t have to become a reality. With a little work and some organisation, you’ll have a working budget in no time. Just make sure to keep track of your money, cut back where you can, and you’ll never be surprised when the bills are due!

A big part of being an expat is also travelling, but it can be hard to allocate money to that when things are tight. But with a decent budget, you’ll be better prepared for budgeting for travelling, too.