Budget Strategies for those who are detail oriented & for those who are not
We already talked about your monthly and yearly money plan like it ain't no thing. In reality, budgeting is as simple or as complicated as you make it. The key is it's YOUR plan and you're the one following it so it has to work for you.
Here are a couple of strategies to help you budget, no matter where you're starting from.
Budgeting for beginners: Create a money diary
The best way to understand where your money is going, is to create a money diary (or spending/saving log) that spans the time period in which you’re interested. I usually look at the previous month so I’m getting real time spending data.
Use this step by step guide to create your diary
Open an excel sheet. Save it to your desktop and name it, “Money Diary MONTH”.
Login to your online banking and open your daily spending account - whether it’s your chequing account or credit card statement
Drag your mouse to highlight your spending over the last month.
Copy the cells into excel.
Start moving the dollars into rows of expense categories as you come across the spending. Categories will include groceries, restaurants, coffee, gifts, car expenses (gas, parking), transit, clothes, etc. The categories can be as detailed as you like.
For example, if your most recent transaction is “SAVE ON FOODS $45.61”, move $45.61 into the column you named 'groceries’. The next transaction is “SHELL GAS STATION $50.12”, move $50.12 into the column you named ‘car stuff’.
Once you tally each column, perhaps you’ll see that you’re spending a lot of money at restaurants and not very much on groceries. Maybe you’re overspending on parking and gas compared to public transit. I buy a few books a month even though I have access to great libraries. All of this information can lead you to make a plan to save more money. Add up what you don’t need to spend and see how much you can save!
After a few months, you’ll understand where you are consistently wasting money and how you can increase your savings.
Make yourself a month-long challenge to save a certain amount, or compete with a friend to see who can save more next month! :)
The Detailed Plan
If you're the kind of person who likes to follow a detailed plan, analyze your monthly spending (as per money diary instructions above) and create a spending plan, first by category and then by week.
By first creating a monthly money diary, you’ll know where you are spending. Set a spend amount for each category - for example, you plan to spend $500/month for groceries, or $125/week. You plan to spend $100/month for restaurants, or $25/week.
Make sure to account for saving money. Based on your income amount and spending budget, calculate how much you can save per month and make it into a bill to yourself. I like to think of my monthly savings like a regular bill to create some urgency and accountability - I make it a priority!
This budget style requires careful weekly tracking to make sure you're staying within the limits. Some people keep a tally in their wallet, others use jars of cash to control their spending. After a month or so you'll know what works for you.
The Non-Detailed Plan
After a few months of tracking my spending and understanding both my habits and triggers, I've moved to a less detailed monthly spending plan, but a plan none the less!
My husband and I know that we need to keep our spending to $2000/month in order to save $3000/month. This is $500/week. By walking to work, making coffee at home, only buying toiletries when I need them, using what I have rather than buying new, we seem to be able to stay between the navigational beacons. Yes, there are months with big expenses but those are built into my yearly plan so I don't worry about those much. And yes, I want to max out my savings so I have a few side hustles that contribute to the bottom line. I'll share more about my spending philosophy and side hustles in future posts!
What's your budgeting style? What's your monthly savings goal?