November 13, 2017

Budgeting... most people dread it but I love it!

Recently I've become very interested and keen to learn about money management and building financial portfolios, so why not blog about it! The 'Financial Fix' is going to be a little series, where I can share my own knowledge and experiences with all things money, and hopefully get a conversation started. I thought the best way to kick off this mini-series is a very obvious but powerful tool, budgeting. The beauty of creating and sticking to a budget is an empowering feat that gives me a sense of control over my finances and I know exactly where my money is going. Everyone has their own little way of doing a budget, and if you are new to the idea I suggest you shop around until you find one that suits you. Here's a quick rundown of how I like to do mine.

Step 1. Backtrack!
Go through the last three months of spending, either gather all of your old receipts or do what I do and scroll through your online bank statements. Allocate each transaction to a category e.g. petrol, eating out, cosmetics, and after adding it all together you'll have a monthly total. Add the three monthly totals together, divide by three and you'll get yourself your average monthly outgoing.
I like to do this all on an Excel spreadsheet, and the three months is just a suggestion you can do as many months or as few as you like

Step 2. Re-Evaluate
Now the scariest part is behind you, I promise. I know when I did this the first time I couldn't believe how much money I was spending on junk from K-Mart and how small purchase from the supermarket really add up! You should be able to identify some areas of your life which are draining a large portion of your income. Once you can identify these target areas, you begin to write your monthly budget and try to aim for less than what you are currently spending on these things.

Step 3. Putting it all together
Using the same categories you used in step one, you can write out what you want to spend on each per month. I like to separate my list into three categories. The first simply shows my total income and amount I put towards savings. The second group involves obligations and expenses that are NEEDS, such as my phone bill, car expenses, uni expenses etc. The group is for all of the WANTS and varying expenses in my life, mainly shopping and social orientated expenses which are also the expenses that can be reduced the most easily. 
Once you've got your list and you're ready to go, write down in one column what you EXPECT to spend for the month, you don't have to be super harsh but be realistic and acknowledge that you can cut shopping out of your life completely or live off baked beans forever.

Step 4. Monthly Check-In
It is important from here on out to keep track of every dollar that enters and leaves your possession. You can do this daily, weekly or at the very minimum check in at the end of each month. Once again allocate every expense from the past month as see if you were below your budget or maybe you went over it. Remember not to be too hard on yourself if you did spend more than you intended to, life happens but I can guarantee you'll start to see your money going further now that you're a conscious consumer.

I want to take a minute to give credit to Canna Campbell from SugarMamma.TV, she has YouTube channel and blog that got the cogs turning in my mind and she has taught me so much over a very short space of time, so I really recommend you pop over to her corner of the internet and take a look around.

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