How To Adult – Budgeting
Are you currently resorting to using your Boots advantage card points to buy lunch at the end of the month? Are you hiding all of your bank statements, unopened, behind the microwave? Taking the time to manage your money can help you get out of debt or save for something important. The aim is to stay on top of your bills and hopefully save money. Today I am talking about budgeting, including how to set up a budget and how to stick to it.
How do you Budget?
To get started, you’ll need to work out how much you spend each month. Maybe have some wine while you do this if you don’t expect it to go well! Before you get started, grab as much information as you can. You need bank statements and any bills and receipts you can find. So grab all the stuff and either your laptop if you prefer to do things in excel or a notepad and pen, and get cracking.
What Are You Spending Money On?
You need to list out or put in a spreadsheet all of your monthly outgoings. If you have quarterly or yearly bills such as car insurance then divide it out, as if you were putting that portion of the money away in savings each month to afford to pay it once a year/quarter. Include everything from rent or mortgage to car costs, gym membership and how much you generally spend at restaurants per month.
There are lots of budget planners online you can use, there’s ones you can download and print out or download as an excel or word template. There are also some great free budgeting apps available. I use a spreadsheet as I find it easier and don’t care if it looks pretty, as long as it works.
List all of your outgoings. I then separate them into different sections such as: home, car, utilities, insurance etc. Then add up all the totals and see where you stand.
Spending More Than You Have Coming In?
You may have known this before you started or you might be surprised by how much you spend. Either way, if you’re in this situation, you need to work out where you can cut back. I will try and do another post about saving money, and a separate one about getting out of debt, however:
Quick Money Saving Tips:
- make your meals at home rather than eating out or buying lunch at work
- No more Starbucks! Coffee is not supposed to be that expensive!
- Cancel subscriptions and memberships you don’t use
- Negotiate your current energy bills or switch companies to get better deals
- Cancel Sky and switch to Freeview, Netflix or similar
- Sell things you don’t need on eBay
- Get a side hustle, from pet sitting when neighbours go on holiday to selling things on Etsy. Most people can think of one thing they can do to make extra money
- If friends are going for dinner then out for drinks, just have a snack at home or work and meet them for the drinks after (you can just say you had to work late)
- Make a meal plan, so you only buy the food you need each week.
- Use mysupermarket to work out the cheapest place to buy your groceries each week
Got Money Left At The End Of The Month?
Well done you! But are you actually doing anything useful with that leftover money? Or are you just seeing the extra money and spending it all on skincare and shoes when you realise all your bills are paid? If you do have extra money at the end of the month then either put it in your savings account or, if you have debts, then put it towards that. I will try and do a post about savings and how to invest money in future.
Cannot Curb Your Spending?
If you are addicted to the thrill of shopping, from makeup and shoes to cars and clothes, you need to get a hold of it. If you need to be saved from yourself and have a good amount of money each month there is an easy way.
Set up a standing order for payday and whisk money that you would normally spend on shit that someone like me on a blog told you was great, into a savings account that’s hard to get the money out of. These are called Limited Access Accounts. Limited access accounts are quite simple – by limiting the number of withdrawals you make or by having to give the bank a certain amount of notice before you do so, you could earn a higher rate of interest than with an easy access account. And you stop yourself going on late night internet shopping sprees.
Spending Money You Don’t Have?
If you can’t stop spending but are spending money you don’t have then you need to really get ahold of yourself. Tell a friend or trusted person about the problem. Cut up the credit card or shove it in a tub of water in the freezer for extreme emergencies. Phone the credit card company and ask to lower your available limit to something reasonable and/or do the same if you have an overdraft. Talk to someone at a debt advice charity if you have nobody to turn to such as Step Change Charity
You might have to stop watching YouTube hauls or reading about all of the latest things in magazines to be able to get a grip of yourself. Addictive behaviours are hard to break, so try and distract yourself with a new hobby, for example try watching a new tv series when you would be browsing online.
Shop your stash and go through the many things you already have and try and use them and love them, rather than yearning for more. In life I find the more ‘things’ you have, the more stressful it is.
What Needs Cutting Back
It can be difficult to change the amount of money you have coming in. But you can try and control the amount going out. From your list of outgoings, work out everything that is non-negotiable. Such as rent, bills, minimum debt payments etc. Then from the leftover money work out what you are spending too much money on and how much you can realistically cut back by.
For energy bills check on comparison sites to see if you can save money by switching providers. If you are really in debt and in a bad place, see if you can move in with parents or a friend for a while, or if you live alone maybe consider a house share.
Setting Goals
Set yourself a target of maximum spending for things like clothing, entertainment, and food per month. If you have debts list out how much is left on each of them, what the rate of interest is and what the minimum payment is. Try and find a 0% interest on balance transfers credit card to transfer some, if not all of your debt.
Sticking To Your Budget
Just like a food diary, a spending diary is really helpful if you don’t know where you are going wrong. Keep a diary of everything you spend for 2 weeks. Look over it at the end of the 2 weeks and try and work out when and why you are randomly spending money.
If you’re eating a lot of takeaways as you are too tired to cook you could buy some ready meals to have in the fridge. You could batch cook some food and freeze it for mid-week. The point is to be able to recognise your spending trends and try and find ways to break old habits.
Visualise Success
If doing anything in this section makes you feel like DJ Khaled, just go with it. He might be crazy but he’s rich! Another One…
Key to success number one. Remind yourself frequently of your financial goals to spur you on to stick with the budget. Saving for a car? Look at pictures of the car and imagine yourself buying it. Saving for a wedding? Start your Pinterest boards of what you want your wedding to look like. Trying to get out of debt? Imagine how free and amazing you will feel when you don’t owe anyone money again and can spend your money on whatever you want. Make a list of all the things you can save for when the debts are paid off.
Prevent impulse purchases by working out how many hours you would have to work to buy that item. Is it really worth it?
All of these will keep your eye on the prize and curb your feelings of wanting to make it rain like Drake in an Atlanta strip club.
Sudden Emergencies
Sometimes in life, shit hits the fan and your ceiling falls down (quite literally). If you are a homeowner, ensure you have good buildings and home and contents insurance. Factor this into your budget as it won’t seem like a great idea to have cancelled it to save money when you’re swimming through your living room and your cat surfs past you on a cushion.
If you have the available funds, always set aside some money each month into a separate savings account or even keep a secret safe in your house and put £10 a week into it. Just for emergencies.
No I don’t mean ‘I’ve had a shit day at work bottle of pinot’ emergencies. I’m talking fire, flood, medical emergency etc. If you have zero funds spare, no savings and everything goes tits up, go on MoneysavingExpert website and work out the best, longest-term, 0% on purchases credit card there is and sign up for that. Not ideal, but at least you won’t have to pay interest on top of it.
Reviewing Your Budget
Life is unpredictable so try and reassess your budget every few months. You might get a payrise, negotiate a great deal on a bill or have an incident where you have to pay out money you hadn’t planned for. The more you keep on top of your bank balance and spending, the more in control you will feel.
Real Talk
I bought my own apartment at age 27. All me, not with anyone else. And you know what? It was damn hard. I’m not a doctor or a YouTube millionaire. But I never gave up. The hustle was real and I even took on a second job of my own mobile beauty business in the evenings to supplement my salary. I often worked 15 hours or more a day, 7 days a week.
You may wonder what my motivation was to work so hard. In short, my childhood was a hellish nightmare. I would wish I had my own safe place to live where it was all mine, and I could do whatever I wanted and be free. And I did it!
I didn’t share that for pity, I shared that so you can see that you can motivate yourself to do anything in life you want. Absolutely anything. Including sorting your finances. It might take some time, but it will be worth it.
Let me know what other topics I should cover!