Yup, we've all been there.. end of the month Salty-cracks are no fun. That's why today I would like to start by explaining something so simple that it frequently gets overlooked, but that can have some serious implications if not done properly. You've guessed it - how to set a budget.
I found it's easier when you do a budget on Excel or something similar because of the Auto-sum function, but you can use a piece of paper stuck to your fridge if need be to remind you of your commitments and what you are aiming at with your savings. Yes, savings... It's remarkable how much you actually can save when you're focused on your budget and sticking to it.
Firstly, make a list of all your monthly expenses; groceries and entertainment, fuel, mortgage/bond repayments, insurances, vehicle installments etc. Now divide all these into the following categories:
a) Necessities: These will include your house/apartment repayments, food, fuel etc.
b) Financial Priorities: This will be savings, education, internet, landline and/or cellphones etc.
c) Fun Money: Here you list entertainment, that nice pair of heels you saw, the odd cup of coffee you pick up on the way to work etc.
Item A should comprise 50% or less of your TOTAL budget. Especially if you live with your partner. I know that no-one likes to think of it, but if unemployment strikes, you need to be able to cut back to the bare necessities, and you may not be able to find a well-paying position again at first. Knowing you will be able to afford your necessities even in hard times helps you sleep better at night, trust me.
Item B should comprise 30% or more of your budget, and the majority of that should be things that can be a buffer during hard times - savings, a good education to help you find a better job, investments etc. Some of this will also go towards paying for 'have to haves', but that won't hurt too much if you had to go without it for a while (while you can't eat Pinterest pictures, you can forego internet for a little while to buy real food). These items (like internet, excessive phone bills, high insurance premiums etc) can all be revisited, better deals can be negotiated, and you can save a fair amount by being sensible on what you spend.
Item C is now entirely up to you. 20% or less of your total budget can be allocated to this section, and is there for you to be able to have the quality of life you can afford and enjoy. It's the fun-money that you go for cocktails with, spoil yourself with, spend with your friends... you get the idea.
It can be helpful to assign a colour to each category for ease of reference, but once you have assessed your financial situation in light of the above you will be better able to make some choices about how you spend, and what your financial future will look like. There are tons of free templates to use on the internet, and even a few easy ones on Excel itself (in the templates section) so I would encourage you to start by at least looking at a few and deciding which one you would like to use.
If you have any tips or would like to share a template/format that works for you, please feel free to leave a comment - we would be really interested to see what is out there!
No comments:
Post a Comment