Most households don't have a budget. They have a rough sense of whether they're spending too much, a vague awareness of where the money goes, and an occasional uncomfortable look at the bank statement.
A proper budget changes this. It moves household finances from reactive ("where did it all go?") to proactive ("we've agreed where it goes").
SimpliHome's budget tool connects to your bank transactions so that as you spend, your budget updates in real time — no manual tracking required.
#How the Budget System Works
SimpliHome's budget has two layers:
- Budget Categories — the spending categories you define (Groceries, Transport, Entertainment, etc.)
- Budget Targets — monthly or annual spending limits for each category
When bank transactions are categorised and assigned to a budget category, they automatically count against that category's budget target. The budget view then shows you:
- How much you've budgeted for each category
- How much you've actually spent
- Whether you're over or under budget
Everything is live — as new transactions are categorised, the numbers update.
#Step 1: Set Up Your Budget Categories
If you've already categorised transactions, your budget categories are likely already set up. But you may want to review and adjust them for budgeting purposes.
Go to Finances → Budget Categories.
Default categories include:
| Type | Examples | |------|---------| | Income | Salary, freelance, rental income | | Housing | Mortgage/rent, council tax, maintenance | | Utilities | Energy, water, broadband | | Food | Groceries, eating out, takeaways | | Transport | Fuel, insurance, public transport | | Healthcare | Pharmacy, dentist, GP | | Entertainment | Streaming, cinema, hobbies | | Shopping | Clothing, electronics, household goods | | Childcare | Nursery, school costs, activities | | Personal | Gym, haircuts, personal care | | Savings | Savings transfers, investments |
Adding custom categories:
- Click Add Category
- Name it clearly (e.g., "Dog Costs", "Home Improvements")
- Choose: Income or Expense
- Pick an icon and colour
- Save
Aim for 10–15 categories. Too many makes analysis confusing; too few makes the data meaningless.
#Step 2: Set Monthly Budget Targets
Once you have categories, set a spending target for each one.
- Go to Finances → Budget or Budget Planning
- Click on a category
- Enter the monthly target (or annual, which SimpliHome converts to monthly)
How to calculate your targets:
If you haven't budgeted before, look at 3 months of bank statements and average your spending in each category. This gives you a realistic baseline. Then decide:
- Which categories do you want to reduce? Set the target below current average.
- Which are fixed (mortgage, council tax)? Set the target at exactly the amount.
- Which are genuinely variable? Set a comfortable upper limit.
Don't aim for perfection. A budget that's slightly generous and actually tracked is infinitely more useful than an aspirational budget that nobody sticks to.
#Step 3: Categorise Your Transactions
The budget only works when transactions are categorised. If you haven't done this yet, see the transaction categorisation guide.
In brief:
- Set up auto-rules for your regular merchants (Tesco → Groceries, Spotify → Entertainment)
- Bulk categorise historical transactions by merchant
- Handle edge cases manually
Once rules are set up, most new transactions categorise automatically — keeping your budget current with minimal effort.
#Reading the Budget View
The budget overview shows each category with a visual progress bar and key figures.
For each category you'll see:
- Budget target — what you planned to spend
- Actual spend — what transactions have been categorised here this month
- Remaining — how much you have left (or how much you're over)
- Progress bar — visual indicator of how far through the budget you are
Colour coding:
- Green — under budget
- Amber — approaching the limit
- Red — over budget
At the top of the budget view, you'll also see:
- Total income this month
- Total spending this month
- Net position — income minus spending
#Month-to-Date vs Full Month
The budget view shows you spending so far this month compared to your monthly target. Halfway through the month and you've spent 80% of your groceries budget? That's a useful signal.
Use the date filter to look at previous months — this lets you compare month-on-month and spot trends.
#Annual Budget View
As well as the monthly view, SimpliHome can show an annual picture — useful for:
- Planning for irregular large expenses (annual insurance renewals, school trips)
- Seeing which months historically cost more
- Planning savings contributions
#Budgeting for Irregular Expenses
Some expenses don't happen monthly. Car insurance renews once a year. The annual holiday. Christmas. School uniforms in September.
How to handle these:
Option 1: Sinking funds. Divide the annual cost by 12 and set a monthly budget target. So if your holiday costs £2,400 per year, budget £200/month for "Holidays" — even in months when you don't spend it. The mental accounting helps.
Option 2: Annual budget targets. Set an annual target for the category and compare against the full year's spend rather than month by month.
Option 3: Note it. Accept that some months will be over budget in certain categories because of predictable annual events. The key is knowing it's coming rather than being surprised.
#Budget and Bills Together
SimpliHome's bills section and budget section complement each other:
- Bills track renewal dates and prevent missed payments
- Budget tracks what you actually spend and compares to targets
For a complete household financial picture, use both. Your bills tell you what's coming; your budget tells you whether you're spending what you planned.
#Income vs Expense: Understanding Your Net Position
Every month, SimpliHome calculates:
Income (all CREDIT transactions in income categories) minus Expenditure (all DEBIT transactions in expense categories) equals Net position
A positive net position means your household earns more than it spends that month — you're building financial resilience or savings capacity.
A negative net position means you're spending more than you earn — worth understanding why and whether it's temporary (an unusual month) or structural (spending exceeds income regularly).
#Tips for Budgeting Success
Review weekly, not monthly. A 5-minute weekly look at the budget catches problems early. A monthly review at the end of the month is too late to course-correct.
Don't let perfect be the enemy of good. Uncategorised transactions don't count against the budget — an important motivation to keep categorisation current. A transaction in the wrong category is still better than no category.
Involve the household. A budget that one person sets and nobody else knows about doesn't work. Share the budget overview with household members and discuss it together.
Adjust quarterly. Life changes — so should your budget. Adjust targets as income changes, as kids get older, as subscriptions change. A budget from 2 years ago may no longer reflect your household's reality.