Budgeting my money is something I have always done since I moved into my own flat almost 10 years ago! I'd like to say I've become a bit of a pro at it, but truth be told, I still miss the mark and what I've worked my budget out to be, never quite adds up with what my bank statement says. But saying this, I'm not too far from it either and I've learnt to use it as an estimate to keep me on track.
This however does not include the times that we cannot foresee such as a repair on your home or car, or even an unforeseen bill which is always the ones that get you in the wallet.
And that's where the rainy day savings come in handy!
In my opinion, Budgeting and saving go hand in hand with each other and I've done both religiously for the past couple of years where my income has allowed me to put some money away.
However I still know of a few people (you may be one, which is why your here reading this, Hello and Thank you for stopping by!), who don't budget or count the pennies and go through life blowing the payday cheques, and then struggle for the rest of the month. Now I'm not judging! To an extent I wish I was just as carefree as these individuals, but I have the fear of skintitis/ brokeitis! And this fear is what drives me to budget and save.
However, at one point I was so fearful of skintitis that I refused to spend a penny I didn't need to. Great in theory, awful in practice.
Because I had once been in such a place where I only had £10 to last me 2 weeks, I wanted to stash what I had like a squirrel whenever I could. I eventually came round though and thought, what's the point of saving money if I wasn't going to spend and enjoy it?!
So right now, I am happy to say that I have found the happy medium between budgeting and saving and letting go of my fear of skintitis, and I want to share what I have learnt over the years and show you how you can budget and save too!
Step 1
The first step is to get your latest bank statement (either a paper copy or look online) and go through each transaction that month. Note down every bill payment/ direct debit you have going out along with how much it is. If you pay some bills in the post office with cash, write them down too.
Add up the total to see how much your estimate outgoings are.
This is also a great way to see how much you might be needlessly spending on things such as food and takeaways/ eating out and potentially how much you can save later on.
Once you've sifted through your bank statement, break up your bills into what you pay monthly and what you pay weekly (you can also add a quarterly list if you pay for certain bills every 3 months).
I do this in my bullet journal where I draw out a table for my monthly bills and below it I section off 4 areas where I write the week date and then the weekly bills/ amount paid.
Keep this available to you pretty handy where you can see it all the time, whether its in your office or on the fridge in the kitchen. This way you'll always be reminded of what needs paying as the days go by and you can sign it off when that bill is paid!
Next you need to know how much your income is per month, so look back on your bank statement again and note down all the different streams of regular income (i.e wages, benefits, tax credits, child support, or a second job you might have) you receive in that month.
Once you've done this, add them up to get your total income for the month.
*It might be worth using a highlighter to show your outgoing bills and incoming money in different colours on your bank statements as it then leaves you with all your spending history so you can look back later at what you can cut out/ spend less money on.*
So now you have both your outgoing and income amounts, you can subtract the two totals to see what you are left with. Hopefully you will have money left over but whether your in the plus or minuses, these next tips on where you can save your money will help, cause who doesn't want a bit of extra cash eh!
Step 2
This is the part where you need to start thinking and prioritising your money and where it goes and how you go about paying them.
Tip 1: Prioritise
You need to prioritise the basics living expenses you have such as rent/ mortgage, water, gas, electric, car insurance, council tax, childcare costs, and any finance loans you've taken out (prioritising these loans and regularly paying them will build your credit score).
Its best to pay these off as soon as you get your biggest income bulk in i.e. wages.
For me I find it easier to schedule all my monthly direct debits to go out at the start of the month as I get my wages at the end of the previous month. This way all the important bills are dealt with early on so I don't have them to worry about until the next month. I basically don't touch my money for the first week of the month so when I go to look at my balance, I know that whatever is left I have I can spend on the food shop and paying the smaller bills I have through the month.
If you only get a single income a month, whatever you have left after paying your main bills, divide the remainder of your money by the number of weeks in the month. For example if you have £360 left after paying the main bills, divide this number by 4 (or 5 if its a 5 week month) this will leave you with around £90 a week to spend on a weekly grocery shop (and even then you can still budget if you plan your meals then make a shopping list. More on that in the How I Plan post) and any smaller bills or luxuries. You could even set aside £10 to put into a savings pot.
If you get a weekly income on top of your monthly income (I refer to this as a top up income) you can utilise this to pay for the grocery shop and any smaller weekly bills. Whatever is left you can spilt 50/50 with saving some and spending some for yourself.
If its a weekly wage you get, its the same principle, Pay the main living costs as soon as you get paid and buy in your food than whatever is left, its up to you save or spend.
Tip 2: Cut the Crap
Some of you reading this may already do the above and it seems like common sense, but there are people out there who get over excited come pay day and blow most of their money without a thought until they receiver a reminder notice for a particular bill come through the door.
However if you are doing the above and still struggling, look back on your bank statement at what you have spent and look at where you can cut your costs and spend less on.
Do you really need the subscription boxes that come through your door? Do you really need to do a full weeks shop in asda, and then spend more money on going out for food or getting a take away? Do you really need to be paying for ALL the channels when you only watch 5 of them and don't even like the sport section? Do you really need those extra pair of shoes?
Look at all the smaller costly things you buy and really ask yourself, do you really need it? Are you getting the most out of it? If not, cancel and save your money.
I cancelled my Sky TV almost a year ago because I got tired of paying for a package I wasn't utilising enough. To make it worse, all the shows I was watching all finished within 3 months of each other. When the last show aired its last episode, that was it, I had no reason for it. I had Netflix which I was paying for ON TOP of sky plus a Now TV box that I was given at Christmas (which had a 3 month free entertainment pass). There was no need for the Sky anymore and boom, £30 extra stayed in my pocket!
And this brings me on to...
Tip 3: Retain your will power and focus
We see offers in every shop we go to and some are more tempting than others. But you need to keep your will power strong and stay focused on what you want and get out quick before you cave!
When it comes to shopping for food, there's always going to be an element of justice to purchasing goods on offer. If you went to pick a pack of ham that costs £1.75 but the offer states "Buy 2 for £3". Yes its cheaper to buy 2 packs for £3 because otherwise it'll be £3.50. However, are you actually going to use all the ham in the 2 packs? If Yes, by all means buy both and save 50p. If not, stick with the one pack, after all £.175 is still cheaper than £3.
When it comes to clothes, try to justify the outfit by the price and how often you will wear it. A rule of thumb I've heard and implied a few times is, for each pound the item of clothing is worth, is the minimum amount of times you should wear it i.e. A new casual top priced at £25 would be worn a minimum 25 times. Obviously it differs with the item of clothing and for what occasion (such as a wedding dress).
When I tried to cancel my Sky TV, I was asked if I was interested in the X package for Y amount, and honestly it just didn't compare to how much would actually save. The X package would save me £10.... cancelling it all together would save me £30. Its a no brainer at the end of the day and even the woman on the other end of the line knew I wasn't going to budge, so that was that.
Step 3
Ok, so we've spoken about how to calculate your income, your spendable income, and how you can start cutting corners and where to save money. Now you need to budget the money you have left.
So if we go back to the example in Step 2: Tip 1 where we have £90 a week to play with, you need to make this stretch and last you.
A way to do this when it comes to your grocery shop is to first plan your meals ahead and figure out which ingredients for said meals you actually need to buy in. Have a look at what you already have in your cupboards and fridge and note down the ones you need. Once you've finished, you can roughly guess at how much you'll spend, the shorter the list the less money, the longer the more money.
As there's only me and Jodie in the house, I know from past shops I spend roughly £30 a week on a single shop, so depending on the amount on the shopping list I budget a little more or a little less accordingly.
What's absolutely crucial is that when you go and do your food shop, you stick to the list! The budget doesn't accommodate for the sweets or snacks you've not put on the list that you see on offer. Put them down and walk away! Grab what you need and go!
So from that £90 we initially had, I've set £30 of that aside and that leaves me with £60. So what do I need out of that £60? Gas top up? Electric top up? Petrol? If each of these were to cost £10 each, that's another £30 gone. Which then leaves £30 left. If there is nothing left to pay or get in, that £30 is now yours to do what you will with! treat your self or save up for that weekend away with the other half.
A Final tip I have for you is if you do have money left over but yet you find it hard to save cause it's easily blown on a night out over the weekend, try setting up a Standing Order for your savings. This way the amount you ask to be transferred into a separate savings account every week/month gets taken out before you even get to see it and whatever is left is yours. Its a win win really! Start off small to gauge whether you can afford to keep it saved or if you're having to dip back in to cover costs. If you're dipping back in, lower the amount until it's at a point you no longer think about it.
I hope this has been helpful to you, despite it being a pretty long post (even writing it has taken a longer than expected!). If you do try out these steps and tips, let me know, I would love to hear from you and how you are getting on.
If there's anything more you want to know such as how to get out of debt or to build your credit score or even any other tips on how to budget to your particular needs, message me or leave a comment and I can always write a post on what you want to see and learn more from!
Thanks again for reading and visiting my blog! All the Love
Ceri x