I’ve always been careful with money but since only having one income and becoming a single mum, I have to be even more careful with the budget. I have three ways of budgeting and I recently shared them with my sister who, won’t mind me telling you, was constantly going overdrawn and being charged for it. Since we sat down for an hour and I told her my three ways of managing money, she hasn’t been overdrawn (even with Christmas to buy for) and has enough money for treats.
There is nothing magical in what I do, it is simply about being organised. In the hope that I may be able to help others, here are my three ways to budget.
1. Write down all expenses and outgoings. I use a spreadsheet so that, if I need to change anything, I can do it easily without crossing things out. On the spreadsheet, I list all monthly bills, such as rent, Sky, gas and electricity. I also list all the weekly bills, such as food and petrol.
It is also important to put savings in for yearly costs such as the mot or car tax, so that there is not a shock when it arrives. I work out the annual bills, then divide by 12 to calculate how much to be aside each month.
It is also important to include an amount for ‘Other’ or ‘Treats’ in the weekly budget. You may feel that you don’t need these but this figure will pay for things like going for coffee with a friend, buying some new socks or gloves etc. Without this row in your budget, you will be short when each time you buy an extra.
When the income is included, it should be at least the same as the outgoings, if not more! If it isn’t, then the outgoings may need to be reduced.
Here is an example of a simple budgeting spreadsheet (not mine)
2. Keep a cashbook up to date. Write in the monthly bills at the beginning of each month, the cash that you will use for the weekly bills and income. Although it doesn’t all go out at the beginning of the month, it ensures that you will have enough in the account to pay everything. Anything extra that is spent, must be written in so you always know how much is in the account.
This is an example using the spreadsheet above:
When the bank statement comes, I simply tick off the transactions in my cashbook. It should all match and there shouldn’t be any nasty surprises.
3. Place weekly cash in envelopes. Take out your weekly spend in cash. This way it is easy to see exactly what you have and you don’t use any more funds in your account than you had budgeted for. We’ve all been there. Spent more on a debit card than we had planned to and blown the budget. This prevents that. But if you do use a debit card, make sure that you write it in your cashbook so you don’t spend more than you have in there.
I place the cash in envelopes that are labelled up so I don’t use more than I have budgeted for each bill.
This might seem like a lot of work but it really isn’t once you start. In fact, it makes life easier. You know how much you have to spend on each bill each month/week and how much you can treat yourself with. As you know how much money you have in your account and how much you have spent, there shouldn’t be any nasty surprises.
Happy money managing and budgeting 🙂