Budgeting – Its not as fun as Fivesies but its certainly an important life skill.
Wether you have a big savings goal or your just trying to make it from one week to the next there are certainty many times in life when you’ll need to create and stick to a budget. This can sometimes be tough but hopefully some of these tips will help you.
Know what you have to work with.
Fist things first, Know what you have to work with. Write down all your usual income sources and their frequency and amount. This may be just the one income from your job or you may have other income sources as well like government payments, regular casual jobs (like babysitting), ad revenue (if your lucky enough to have enough internet traffic for something you create to collect that). If your income is not always a regular amount try to average it across a month or two to get a regular weekly/fortnightly amount.
Possibly the toughest part, get your priorities straight. What’s you’re big goal, what can you drop if it just doesn’t fit, what payments must be made in a certain time frame/frequency.
To start this I would suggest listing what you spend your money on. Either in detail or some slightly boarder categories. Whatever works for you. Just remember you want a good idea of where your money goes (or will go if you only just got an income).
From there rank them in order of priority to be paid. In general things like bills and other general living expenses should be at the top and fun and non essential items should be at the bottom. Depending on your savings goals it may be at the top or somewhere in the middle.
Break it down
Break all your bills and general spending down by pay period. If you get paid weekly put money towards each category/item weekly. If you get paid fortnightly put aside the money fortnightly.
Always work on a pay period basis. This will especially help if you don’t have a steady income. If you’re paid different amounts each week, work out your weekly wage by averaging a month or two of your last pay cheques. On weeks where you earn more than the average put what’s left to the side to boost your pay to the average amount on weeks when you are paid less. If you then put money aside each week towards your bills and other fixed expenses then you won’t be caught short if they happen to be due in low income weeks. It also means you aren’t reducing your saving or spending amounts on weeks you have bills due.
Create a spreadsheet, start a log in a notebook, find an app that works for you. Write down your plan somewhere you can refer back to it and adjust where necessary.
Personally I have a few different methods for a few different aspects of my budget.
I have a spread sheet that details the break down of my budget and generally how I came to decide on those figures. Its easily editable when things change and helps me remember why I set the figures the way I did.
I keep track of monthly payments and bills in a monthly calendar. I mark down what days payments come out of my accounts and what bills I need to initiate the payments for.
I have in the past tried a few apps and while I haven’t found one that works for me yet it doesn’t mean that one won’t work for you. In this mobile day and age there are many different apps out there which will help in many different aspects of budgeting.
Once you have worked out what you spend your money on put it into categories then separate that money out. Whether you do that by setting up multiple accounts or withdraw the money and stick it in envelopes or use an app to digitally keep track of what money you have just make sure it’s always very clear how much is there for you to spend and how much is already tucked away for something else.
Build in safety nets where possible inflate your expected bill amounts especially for fluctuating amounts.
Most importantly, budget yourself some spending money. It doesn’t have to be a lot but in my experience the best way to stick to a budget is to have some freedom in spending your money. If you budget in some spending money you know you will have some money to spend on you or someone else guilt free each week.
Give a go for a few pays then review it. Look at what’s working for you. Look at what’s not working. Add in the things you forgot about at first. Adjust your buffer amounts if needed. Then keep reviewing it as regularly as needed. I usually review my budget every couple of months or whenever I feel like my spending is getting out of hand.
If you’re constantly having to move money between categories to make up the differences it’s time to review it. If you regularly find yourself with excess money at the end of your pay review your budget, work out where else it could be used.
Even if it’s all going well you should still review it a few times a year if only to make sure it’s all still relevant.
So that’s my tips for basic life budgeting. If you have any questions please comment and I’ll do my best to answer them.
The next life skill we’ll be tackling in a couple of weeks is washing.