Budgeting for Things

As a millennial, we keep blaming things on the economy, the government, and the world for why we’re not all richer. Sometimes it’s tempting to do that. I’m not that much of an asshole, I don’t generally wish I was richer without actually doing the work. I know people who do do that… ahem youtuber wannabes.

For those who aren’t really chasing a pipe dream, those who earn an ok wage or even those who are struggling a bit to make ends meet - have you ever created a budget before?

Sounds like such an easy question but honestly you’d be surprised how many people don’t. I know people who live way beyond their means and it’s rather scary sometimes. I know some high earners (£60,000 or over) who aren’t able to save £1000 a year. To put that into perspective - if you ate a meal deal of £3.50 each day for a year, that’s £1277.50. So let’s just say you gave up your meal deal lunch and made lunch instead, there’s your £1000 a year.

When I started my first job, I wanted to ensure that many things were kind of taken care of before I even thought of spending any type of money on myself or my wife. This obviously sounds very unsexy, but when has budgeting ever really been that sexy? It’s a necessity as well as something that I really need to take into consideration before anything else.

I want to share some of the tips that I use that helped me save that I wouldn’t necessarily struggle through life.

1. Make a list of the things that you really need to budget for

Now this part will take quite a while because it’s something that you really need to plan and think about. For example, every year I have a list of things that I need to pay for that always happen:

• MOT
• Car Insurance
• Servicing
• Road Tax
• Amazon Prime
• Journal Materials
• Water Filter cartridges
  
  

There’s probably more but as a yearly cost, I make sure to set aside money for this every month so it will have money to pay for these things.

It doesn’t really stop there, that’s a yearly thing - what about your monthly things? Make a list of those things as well:

• Rent
• Groceries
• Utility Bills
• Petrol
• Mobile Phone
  
  

2. Inside your budget list, add in some of the fun things and savings that you need to budget for as well

So within my spreadsheets, I have things like:

• fun fund (guiltless spending)
• Investments/savings
• Credit card payments
  
  

Make 100% certain that that is put into your budget list as well.

Once you get that list together, and it can be a really long list, set that aside, and we’ll start creating a spreadsheet for them.

3. Create spreadsheet for every thing that you need to budget for

So now that you have the overall picture - make that list into a spreadsheet and start putting the amount in.

4. Create some automation with your finances

In UK, we have these awesome challenger banks. I suggest you go for one of these for your day to day banking/savings to make life much easier. I use Starling Bank and would personally recommend this bank for EVERYONE. You can feel free to use Monzo, they all do roughly the same thing.

The reason I suggest a challenger is simply because a while ago, I wanted to save up/budget for the stuff in my list. To do so it’s best to have a separate savings account for these things. Trouble is, you’d need a savings account for nearly each budget item. In my list, that would be around 25 savings accounts that need to be open.

With Starling, they have a concept of spaces: which is essentially like a savings account. I can put money away from my main account into these spaces, so whatever’s left in my bank account is to spend etc. It makes life much easier, but that’s not all.

Say you get paid on the 24th. You can put automatic rules in to take money from your bank account and place it into your spaces. This is essentially putting aside money until you need it etc. Monzo goes a step further and states you can pay for direct debits/bills etc from the pot (same concept as spaces). Either way, these bank accounts also give you notifications if your bank account is low in funds - so it helps with reminding you when to take money out of your spaces/pots to pay for bills etc.

That’s literally how my budgeting is done. It’s honestly not that hard, it’s one of those things that you need to have a good think about at the start but after that it will be easy enough to sort out. The hardest part is no.1 because you really have to think about it hard. Things that you don’t realise like “every year I need to buy xmas presents for my 5 nieces/nephews” - even that you should be budgeting. This helps you for things that you know you are going to need to budget save up for. It also prevents you from living beyond your means.

I done the fun fund a while ago - where I set aside some money that I can guiltlessly use, although in my experience I still have to think hard because the amount in there doesn’t stretch very far. It’s important to set aside money for fun, whether it’s once a month visit to the cinema, or, in this locked down world, treating yourself to a subscription box.

Everything that you can predict, you should make a budget for. If you don’t, it just means you have money set aside. These habits alone can really help you for saving for the future or digging you out of an emergency.