Lately I’ve been attempting to get ahead of organising my life and my personal budget. It’s an incredibly boring topic on the surface but one that has eased plenty of my anxieties of late and that I guarantee will do the same for you. Whether you’re attempting to save for something big, something small or just something special, or you’re even just looking to get a grasp of your income and outgoings, this is a pretty failsafe method of crafting a budget that’s realistic and non-scary. You just have to take that first leap of faith. Hand on heart from a wild head-in-the-sand spender, trust me.
It isn’t all bad
One of the biggest blockers when it comes to budgeting is the mindset that a budget = no life. There are plenty of negative connotations towards ‘being on a budget’ and it certainly doesn’t have to be that way. Another is that it does slightly force you to face up to your spending and your expenses. How many of you have pulled the wool over your eyes when it comes to checking your bank balance? Totally skipped over the ‘View balance’ option on an ATM and opted straight for a cash withdrawal? Me too girl, me too. “A £10 here and there won’t do any harm,” Sound familiar? I’d really recommend getting to grips with your accounts by looking at your payslips and instead of despairing about your NI contributions and student loan repayments and all of those super annoying odds and ends, look at that final sum with a realistic mindset. The next time that you’re withdrawing cash, do check your balance and face facts.
Use an app or spreadsheet
Boring though it may be, I spend a lot of time making spreadsheets on Numbers (an app from the iOS store, kinda like the Mac version of Excel) and in my budgeting app. Whilst that was mostly for my business accounts, I recently created a Monthly Budget working sheet and Tweeted about it. Honestly? I just use a template from Numbers – it’s that easy. The spreadsheet is filled out with formulae and charts that’ll help you visualise the entire thing and it’s not scary. I duplicated the table so I could get a one-pager look at my incomings (i.e. I listed out all of my clients) and outgoings.
The important thing here is to be seriously realistic about each category. On mine, for example, these are some of the categories I use: Phone, Netflix, House Contribution (as I don’t pay rent, I contribute some money towards my parents’ house), Help to Buy ISA, Pet Costs, Car, iMAC, Leisure, Personal Spending, Honey + Chai, Savings and Travel. You’ll notice I absolutely won’t give up Netflix or my goals of owning a car again plus a shiny new iMAC 😉 I then use two columns for ‘Expected’ and ‘Actual’ figures as these obviously vary from month to month. It’s a good way of gauging where your outgoings might fluctuate from month to month and beginning to prepare for these. If, for example, I spent a little more on the pets in February, I’ll plan to reduce my travel costs in March, that sort of thing.
For freelancers, this proves especially useful in the income table as you can plan how much you’d like to be taking in from your clients and plot that against what you’re currently earning. Seeing the difference totalled in front of you is such a motivator!
I have such a love/hate relationship with this app. It features a pie chart UI and is pretty aesthetically pleasing but boy does it make you face up to your spending! You have to be on-the-ball with it and enter details in manually, but it gets addictive and over time, you’ll notice just how much you spend and how much of that is completely unnecessary. Again, it forces you to take ownership and be accountable (heh) for your spending habits. I mean, once my ‘food’ slice of the chart hits 50%, I know I should start panicking 😉
How to save?!
Now that you’ve got down and dirty with where in the heck your money is going (*ahem* ASOS and insert-hipster-coffee-joint-here), you can get savvy with making a few cuts here and there. I worked out that in one particular month, I’d spent £46 or something stupid on coffee! I’ve since reduced that down to £18.20 per month and I’m kinda in a competition with myself to cut that down even further.
Plot in figures in the ‘Expected’ column on your Numbers sheet that you could realistically work towards and cut them as low as possible, aiming to keep at that for the month. Then, add in the ‘Actual’ amount after the month ends. How did you do? Could you drop your Netflix subscription down a notch? Perhaps you could make a note of the cost of your average weekly shop (I find the best way to do this is do a fake online grocery order and jot down the price) and try to adhere to that. Could you switch electricity or gas providers for a better deal? Or maybe you could slice a fiver off your Leisure spending and add that to your Savings category? Go to town and play around with your Numbers faux-money and see where your income can actually go. It’s truly in those odd pounds and pennies that the difference will transpire.
And the actual saving
I won’t plough straight into a ‘best bank accounts’ recommendations section as that’s totally not my call to make but I’d really recommend opening some sort of savings or ISA account where you cannot withdraw or move the money. Once it’s in, it’s in. Ahem. It’s a common ‘millennial’ thing to dip into our savings all the time, but that’s such a terrible habit to have. Once you’ve opened one, pop the maximum first deposit in there that you can financially manage, then refer to your spreadsheet and work out how much you can realistically – and realistically is the key here – afford to devote a Direct Debit to the account. Set that up straight away. You won’t even miss the money if you arrange it for payday.
And last but not least, don’t forget to save what’s left from your spending. I have absolute faith that you’ll have some extra dollah dollah left over after your budgeting. If you budgeted to give yourself £100 spending money for the month but your obligatory ASOS basket – god willing – only came to £85, put that £15 straight into your savings account. And then start afresh the next month.
I hope you found some of these tips useful! Do you have any tried-and-tested tips for me? Do share them below!