A Reminder Course In Budgeting 101

If you’re anything like me, your budget was beautiful in about 2007. Very accurate, thorough, exquisitely calculated. Here’s a reminder course for anyone who needs a budget (or a first up for any new readers) that tells them something about their lives in 2011, and will help set them up for the rest of the century.

Creating A Budget

We should all know how to do this, but somehow I still have months in the red so it never hurts to refresh. Even if you have a budget, sit down and write down your income. Have a spouse? Write down their income as well. In the next column, write down all your fixed monthly expenses. Rent/ mortgage, insurance, debt repayments, gym membership, electricity bill. It’s easy to forget them, so make sure you have a comprehensive list. Next, pull out your bank statement and receipts and find out where the rest of your money goes. Groceries, entertainment, subscriptions. It will probably be shocking. Potentially you should buy some chocolate before you start this. Now do the sums- you’ll see if you’re in the black or in the red, and probably some areas you can improve upon.

 

Dig Deeper

The first swing at your budget might be good, but if you can track your spending for a month, you’ll be on fire when it comes to the revised budget plan that definitely needs to happen one month in. Bad spending habits usually stem from thoughtlessness, and the process of writing it down will help you both track your money and stem the tide of spending as you are more conscious about where the money goes. Use whatever tool helps- internet, pocket book. I like iPhone apps, I can update them all the time and they sync to a website. Pocket Money is a good simple one, or Mint is comprehensive. Bundle is meant to be a great online tool, although I have yet to check it out.

Cull

You don’t necessarily start a budget expecting to cull some of your outgoings, but once you see what’s happening, it’s a certainty that you will. Eating out- even including the 3pm chocolate bar from the servo- is often the first thing to go. Cull according to your goals- living within your means, saving an extra couple of hundred a month, having more of an income for travel. Wasted money- money spent without thought on things that bring brief enjoyment- is glaring once it’s on paper, so cull away until you are happy with where your money is heading.

Revise

You’ve got the basics, and should start to see improvements. I would suggest revising the budget at the one month mark, and then every three months after that, pretty much religiously. If you’re using a tool, make sure you update it every time you get an extra income strand or regular expenditure. Revising will help you tighten or loosen up your budget according to your needs, and to check any unnecessary costs. A budget is no use to you if it’s out of date, so make sure you keep it current. You’ll find often that a budget allows you to afford the things you really want and to save money on the things you don’t necessarily like all that much- meaning that while it might seem budgeting is about misery, it will actually improve your enjoyment of life. And- with an absolute guarantee- it will improve your bank balance.