Let’s budget
On a personal note, I think I have always known how much I am making a month and a year. That is because from age 16 I was given a monthly allowance and had to learn to track my spending. So as soon as I started working, I made sure I could afford what I had laid my eyes upon. But retrospectively, my start was messy. It was an (too) simple Excel file with three columns: date, description, amount. Positive when it came in, negative when it came out. I used that system for around 10 years, until I met my wife, had my son and saw my number of bank account go from 1 to too many.
So my Excel evolved into something I thought was more elaborate. In truth it was the same but with board everywhere. I just took the habit to keep on top of the lists the recurring payments and attributed a sum to my cards. “Good job” was I thinking then… But I was so wrong. And it took me until early 2022 to realize that. We had spent 2020 and the best part of 2021 with only my wage, a mortgage, a wedding to finance and uncontrolled monthly spend. All my bonuses went into keeping my balance sheet at 0 at best, and I started eating out my savings. Early 2022 was I came across a free newsletter which aim to educate people on personal finances (Snowball). I took a liking to it, paid the fee to be premium and started learning about the basis of all: budgeting. The real act of budgeting. Which is the next step to act upon for you, and a “passage obligatoire” to start with your finance.
At the end of this article will be a link to the model I created for myself and that you, potential readers, could use to budget. You can download it against a small fee. Structure is simple and I put notes everywhere for you to understand the purpose of each part. Of course do not hesitate to custom it, make it better and/or make it to your liking.
As you should have started with reading the previous post -if not go do it- you now know how much you have left per month, after the recurring payments were taken into account. From that, you will need to create categories of spending. I will highly recommend to not only attribute an amount to each but to create lines. For instance, food should obviously be your biggest category. Inside, you can put a line for “Week 1” at 100, one for “Week 2” at a 100, and so on until all the category’s amount is fully split. There are two advantages doing that: first, after a few month of practice you will have adapted each budget to exactly what you need; second, you can see quickly enough if you will end up deviating from the original target.
By the way, deviating is not bad if there is a reaction. Say you are planning a surprise party for your other half and that it is leading you 50 over your food budget. Look at the other categories and try to see if you can reduce 50 from one or many. You cannot ? No biggy, try to adjust with less spend the month after to compensate. The goal of budgeting is to feel empowered, in control, not to feel in shame because you have failed once. It happens, it is called life and even after a few months of budgeting with this method, it still happens too often. I understand the reasons why, I know how to act (being less passive with joint spend for me) so I am still in control of the global narrative. Just need to master all the chapter inside now, which will come.
Finally, now that everything is budgeted and forecasted, you just need to track the real expenses. Personally I look to update the file every two days. I connect to my bank accounts to check if anything out of the ordinary has happened, and then check that the recurring payments are happening as they should. Every time I spend money, I either get the ticket or remember the amount of spend to write it down as soon as possible. I am realizing that I have not talked about tools. The file I provide is Excel based, but I am sure it could be export to a GSheet easily enough. In the end it will depend on what you have a habit to use.
So there it is, you just read about my basic approach to budgeting. I am sure there are other ways to tend to that, maybe more efficient ones, but I am happy with what I have and I today do not need more. And when I do, I will update my template to reflect the new need, as I have always done so far. I do hope you enjoyed reading that and it will somewhat help you in the future. Feel free to comment in the appropriate section to share your thoughts, remarks or questions. The link below we lead you to my file, if you ever want to buy it.
Thanks again for being part of this small adventure and see you on the next post, which will be detailing available supports to invest your savings in ! And remember,
Sharing, always with Optimism-e.
