The Twenty Mile Club caught up with John Ellmore, Director of to share the most effective ways of budgeting to stay on top of our finances.

It’s not something that’s often talked about, but problem debt is a lot more common than people might think. In fact, more than three in five UK adults are in some form of debt according to a recent study by, with the most common types being credit cards, mortgages and student loans.

To avoid falling into debt, and to ensure you have a strategy in place to effectively manage your expenses, creating a budget must be a top financial priority for all consumers. Not only will this ease concerns about excessive and impulsive spending, it will also help you work towards a long-term financial goal.

For some, the idea of implementing a budget has a necessary trade-off – saving money means sacrificing some things you enjoy purchasing or doing, be it eating out at restaurants or pursuing a hobby. However, this couldn’t be further from the truth. With a bit of guidance, everyone can budget in a way that allows them to continue to do the things they love without spending beyond their financial means. Below are a few key considerations to keep in mind when creating your own personal spending plan.

Understand your own financial position

Before you can start budgeting, you need to have a good understanding of your own financial position and how much you can realistically spend without falling into debt. While this might seem like an obvious point, a significant number of Brits are unaware of their own financial position.

Do you know the term debt-to-income (DTI) ratio is, for instance? According to the aforementioned study by, 39% of UK adults can’t explain what the concept means. This is despite the DTI ratio being a valuable tool that determines how much debt you can reasonably manage based on your income and current debt levels. To calculate, simply take your total debt figure and divide it by your income.

It’s always helpful to know what your DTI ratio is, regardless of how well you are staying on top of your finances. And importantly, there are plenty of online calculators to help you calculate this in a matter of minutes!

Create a savings pot

The importance of financial planning cannot be overlooked – one must have a clear idea of their financial position and budget accordingly. But try as you might, it’s almost impossible to anticipate unexpected costs that could set you off track.

That’s why I would encourage everyone to create a savings pots in preparation for a rainy day. This will give you some wiggle room should you need to delve into your pockets to meet an unforeseen expense, be it car maintenance or a broken boiler.

The transition from cash to contactless payment options has made this process inherently simpler. Apps like Monzo now offer users an intuitive way to set money aside, away from their main bank account. Progress bars act as an incentive to keep you on track for your savings goal – and for those who lack willpower when it comes to spending, users can also lock their pots to stop themselves from dipping into their savings. 

Monzo and other challenger banks like Revolut also have features which allow customers to round-up payments and save their spare change. Say you’ve just spent £5.75 on your lunch – this will be rounded up to the nearest whole number (in this case, £6), with the balance diverted into a savings pot. While 25p doesn’t sound like a lot of money on its own, once this is regularly compounded by daily purchases, you’ll see the rewards of making small contributions to the pot.

While Monzo and Revolut aren’t the only big players helping users save towards their financial goals, they illustrate just how seamlessly this can be done; you won’t even realise you’re doing it!

Track your spending

It’s easy to get carried away and make impulse purchases on things that aren’t necessary, but it’s now even easier to track your spending to set yourself up for success and prevent yourself from falling into this trap.

Don’t worry, you don’t need to write everything down to keep yourself accountable – new apps mean that consumers are able to easily manage their daily outgoings and monitor their spending habits. Some examples include Yolt and Money Dashboard, which allow you to track your outgoings, and offer a comprehensive oversight of what you’re spending your hard-earned money on.

You’d be surprised how quickly little things stack up; a takeaway coffee from your favourite café might not seem like a big expense in the grand scheme of things, but when you consider how much accumulated money you’re squandering on this each month, you might rethink your approach.

Don’t rely on credit cards

To keep a firm grip on your finances and avoid falling into debt, I would encourage people to think twice before putting purchases on a credit card. The temptation is certainly clear; credit cards offer people a convenient way to pay for things without necessarily needing to have the upfront capital to cover the cost.

There are undeniably times when taking on debt can support your long-term financial goals, such as purchasing a property. However, for purchases that aren’t essential, this practice could lead to problems down the line. This is particularly true if you don’t have a plan of how to pay this debt off, or lack a cushion of capital that you can rely on in case you need to pay back the debt quickly. Indeed,’s research revealed that, of the people who have some form of debt, 33% admitted to buying goods on their credit card without first thinking about how they will pay for it.

Talk about debt

Although not strictly a budgeting tip per se, I cannot stress enough the importance of being open about your concerns if you’re struggling with financial issues. The link between debt and mental health is evident; debt is a common cause of stress and anxiety, and is the reason why almost a quarter (24%) of Brits are regularly losing sleep.

Despite this, 41% of those in debt do not feel comfortable talking to friends and family about the money they owe. Whether this is due to the stigma surrounding the topic, or a desire to protect loved ones from these issues, we as a society should encourage each other to be more open about debt. Not only can this inspire better practices, it can also take the pressure off budgeting.  

Budgeting doesn’t necessarily have to be negative or tiresome. It can even be exciting if you find solutions that work for you and help you stay on track to reach your goals. The tips outlined above are by no means exhaustive, but I hope they provide a helping starting point for those who want to take their financial planning more seriously and stay on top of their debt.