How to Budget Using The Pots System
Everything You Need To Budget Using The Pots System
How to budget using the pots system
Staying in control of your money is very important. To do that we need to know how to budget. And one of the most effective ways you can do that is to learn how to budget using pots.
Budgeting using the pot system can have an astounding impact on your financial health. And better still, banks will help you do it, too. Let’s explore how to budget using the pot system and how banks can help you do that.
So, what is the Pots system? The Pots budgeting system is a budgeting philosophy in which your income is placed into pre-defined categories (or pots) for spending each month. The amount within each pot is determined in advance to achieve certain objectives – save money, enjoy more of life etc…
How do I budget properly?
Have you ever got to Sunday evening and thought ‘how did I spend so much money this weekend?’ You’re not alone and you’re in good company. But the truth is that we should never be in that position. And if you follow what we’ve pulled together here, you’ll be totally in control.
The fact is that you need a budget. But how? There are loads of budgeting planners and budget apps but how do you know which is the best budgeting app in 2021? Mint? Yolt? Tandem? Money Dashboard? Is there a best budget app for iPhone – or android?
We’ve done the legwork and we’ve got the simple answer.
How to budget using pots
Firstly, a budget doesn’t mean anything unless we follow it. And since we’re human, we sometimes tend not to. Therefore, we need to make it as clear and as easy as possible. So, how do you budget using pots? We need our money displayed clearly – a money dashboard. Every pound has an assignment before the month begins and you have a system in place to ensure that they perform that assignment.
We’re going to show you a new budgeting system (or budgeting template) made possible by some of the up-coming “challenger banks”. It’s called “The Pot System” (formerly known as the jam jar or envelope system) and it is a fantastic budgeting template to get you on top of your financial accounts and financial life. It’s the envelope system, except in the 21st century.
With that in mind, here is our step by step guide on how to budget using pots. Then, we will look into how banks can help you budget this way.
Your Budget Template
(1) Write-out your numbers: include your salary, your monthly take home pay after taxes, and any debt you have. These numbers will change over time, so it’s worth revisiting this exercise every 6-12 months to optimise it. This is essential and the first step in learning how to budget.
(2) Know your fixed costs: Fixed costs are anything that you can count-on having to pay every month – your mortgage, your subscriptions etc… Your fixed costs wouldn’t include items like food, leisure or holidays – but, as we know, we will treat them like fixed costs in step 4.
(3) Know Your Mission: One of the most common reasons for slipping from our budgets is because we forget why we started in the first place. Before downloading any budgeting apps, really put some thought into where you want to get to. When you follow something like the pot system of budgeting we can make that a reality.
(4) Give every pound a mission: Now comes the fun part – how we budget using pots. Write down a list of anything you would spend money in a month – food, dentist, insurance, Christmas gifts – everything. Remember, every pound has an assignment. All of your money should be spent on paper before the month starts. The best part of this system is that you don’t need to think about what you’re spending. All you need to do is follow the budget you have outlined and you will achieve your financial goals.
(5) Choose Your Bank: And now it’s time to find a bank that can help you budget by providing the right platform.
How to budget with banks
Did you know that out of the 345 banks and building societies in the UK, less than 3% allow you to budget using pots?
Here are three banks you can get started with right now,, though there are a couple more. There are lots of great features these banks have, such as the ability to freeze/unfreeze your card from your phone, great exchange rates, zero fees when using your card abroad and more. But we’re going to focus on the budgeting element specifically.
Monzo is the self-proclaimed bank of the future. Monzo is bank that is really in tune with 21st century people and habits and are really big on providing tools to help you budget and save like a boss! The bank is app based, and has no physical high street branches. As for customer service – they’re second to none with all communication going through an online chat system through the app. To get started and earn yourself £5 towards your saving goal, you can sign up here.
Starling Bank is another amazing mobile bank. Although it is a mobile-only bank you still get a bank card, bank statement and all of classic things. In fact, Starling won Best British Bank 2019 and Best Current Account 2019. If you want to get started with Starling Bank they will text you the app so you can start today.
B is the birth child of Clydesdale Banks and Yorkshire Bank. YouAndB is an intuitive digital banking service created for people who want to take more control of their money. Similarly, you would still get a bank card (a jazzy one, at that) bank account number and all of the classic stuff.
It’s worth noting that there are a few other banks that help you budget by offering this feature such as N26 and Revolut. These are amazing too, but in the interests of getting you back to your family before you’re old and grey we’ve just spotlighted three.
How to budget using the pots system
There are many ways to maintain better control over your finances. Some are fancier than others. You’ve already learnt how to budget using pots and that’s an incredible system. If you’re in the process of moving home be sure to check our moving home checklist. We can also help update your address online. This includes Tesco Clubcard change of address, TV Licence change of address and hundreds more. Ultimately, it comes down to setting a purpose and creating a plan to achieve that purpose. Being human, we want to make it as easy as possible to ensure we follow that plan. If you get this right, you can worry less about what the Bank of England’s base rate is and more where you want to get to with your financial planning.
Banks can help you budget, but we need to actually stick to it and follow through. Consider using the pot system; the pot system has had amazing success and really does put you back in control