Money-Saving Tips: Our Guide to Activity-Based Budgeting

Money Saving Ideas

One of the best ways to consistently save money is to keep a close eye on your budget. The stark numbers of your monthly expenses will expose vulnerable areas that you may not even be aware of. For example, your regular Starbucks habit may be costing you £500 each month, or you have signed up for so many online video subscriptions that you aren’t even using regularly.

When you can keep a close eye on your monthly cash flow, you’ll have better control of your personal finances. For this reason, consumers must learn to live by following certain budgeting techniques. For example, one effective budgeting technique you can use is Activity-Based Budgeting (ABB).

What Is Activity-Based Budgeting?

Activity-based budgeting (ABB) is a technique commonly applied in the business world. It refers to listing every activity that costs a business money. Once all activities and their respective costs are written out, every line item is reconsidered thoroughly in an attempt to streamline the business process and find ways to save money.

Each pound spent is scrutinised and reevaluated to ensure that business spending is as efficient as possible. All business costs and revenue are assessed more than once. Every service or subscription should be netting a significant return on investment.

If a particular expense is creating substantial profit on a small scale, additional spending on it can yield exponential returns. New cost-effective solutions are then applied to these activities, and improved, stricter budgets are distributed to the different departments within the business.

Applying Activity-Based Budgeting to Personal Finance

ABB in personal finance means thoroughly scrutinising the cost of every action you take during the day, week, month, or even year. The data gathering process will take some time—you need to be more conscious about your spending habits than ever before.

For example, your list for the week will include a trip to the supermarket, dining in a restaurant with a group of friends, going out for a movie, and running a bank errand. In applying ABB, you should figure out the cost of every single activity. This is where you should be as nitpicky as possible and calculate all evident and hidden expenses. You could list fuel costs since they can contribute to your monthly expenses’ unlisted expenses.

When you have all of your weekly expenses listed out, it’s time to brainstorm all the ways you can be more efficient and cut costs. For example, if you schedule the bank errand right before your trip to the supermarket, you can save on fuel costs with one trip. Likewise, if you regularly spend an extravagant amount on snacks at the movies, you could have a snack before leaving the house instead.

Altering the most minor details of your weekly, monthly, and yearly habits can save you a lot of money in the long run. ABB can seem complicated at first. However, you’ll be surprised at how much room you have for improvement. Once you get used to being more mindful about your daily activities and corresponding expenses.


One of the vital elements of personal finance is self-awareness and conscious spending. ABB highlights all of your personal habits that may be costing you more money than they should. When you streamline all of your regular activities, you will easily be able to shave off significant amounts from your expenses.

Our team at Frugal A Lot is committed to helping you save money all day, every day. We have collected all the resources you need to level up your personal finance habits. Our money-making and money-saving hacks and tips will keep the cash flowing in. Check out more of our budgeting tips and money-saving ideas today!

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