Budgeting is something that is a stumbling block for so many people. It is thought of as a restraint and a burden. Why should I tie myself to a budget? I earn my money, why can’t I spend it on what I want, it’s mine? I sweated blood and tears for that, I deserve a treat!
Well, you can spend it however you like, BUT if you plan for these things and budget accordingly, you can have those treats and things that you want without the stress of not having enough for your rent or to see you through to the end of the month. I am going to show you how I budget in the hope that it will also help a few of you. My method works with regular incomes and those that are more sporadic.
There are many ways to plan your budget, but the main thing is to be honest with yourself. You can add in whatever you want, it’s your budget at the end of the day, but it is a waste of time if you don’t stick to it. If you do nothing else that I recommend but sticking to a budget, you are already well ahead of the crowd.
I follow the Dave Ramsey method as I have mentioned before and I work to a zero-based budget so every penny has a home. What that means is that every penny is allocated to either a payment or to savings, so at the end of the month, there is nothing left.
I break my payments down into 8 categories as follows:
Some of you will be lucky enough to get a regular income each week / month and planning your budget is easy, you know what is coming in and can allocate it accordingly.
However, if you’re like us, you may get different amounts each week depending on what you have earnt. My income will be paid each month on the same day, easy to plan (I start a new job on Monday, so this is the first time I will be paid monthly). However, Chris gets different amounts each week depending on the hours he has worked. I used to struggle with this, but now I plan the month on the lowest amount he ‘normally’ receives so should that happen, we are prepared and anything over is a bonus.
Income is easy, anything coming into your home goes into this section – Wages, Invoice Payments, JSA, Universal Credit, Child Benefit, Maintenance, Money from selling stuff (eBay, Marketplace, etc.), the list goes on.
When starting your budget, you will need to plan with minimums, so first put in any regular payments (for me that will be my monthly income) and then add your estimated incomes (that will be the minimum we expect from Chris’s weekly wages). At this point, don’t add in your eBay sales or any other income you are HOPING to get in, they are not confirmed and only get added once they have been received. I then complete the income section of my spreadsheet, here is an example:
You will find a copy of my spreadsheet on my download page. It is easy to use, but you will need a bit of Excel knowledge to update it each month, however, if you prefer, you could print out and complete it manually, or copy it into a journal, use it however you want, it just has to work for you.
At the moment, we are only adding the total you expect for the month and the dates they are due in, so Chris’s money will be weekly and I get paid on the 26th. If you are paid randomly, don’t worry, put your expected income down and leave the due date blank, this is just the beginning of our workings. As you can see, there is space for further income streams if you need them, just amend the names as necessary.
Now we need to budget these amounts to the relevant week in the month. At the top of my spreadsheet, you will see a blue box where you can enter a date. This date can be whenever you want your month to start, so for instance, if you get paid on the 26th of every monthly like me, put the 26th, or you could put the first friday in the month as I have if you are paid weekly. This makes it adaptable to suit you.
Once you have decided on your start date, the other dates will fill automatically to show you the weeks in your month and you can enter your income accordingly, for example:
In this example, I have shown a 5-week month, but you can leave the last column blank if you only need 4 weeks, do whatever works for you. I have also shown a zero balance brought forward as I zero out my balances each week, but you may do things differently and can add a brought forward figure here (the subsequent weeks fill automatically).
This is where you can add in extra incomes as they come in, so for instance, if you sell something on eBay and get the funds on the 18th November, you can add it to the relevant box as I have shown (highlighted yellow) and just continue as and when payments are received. I will show you how to then allocate this extra money later on.
On my next post, I will show you how to budget Essential Bills and Luxury Bills and how to tell the difference, until then, keep budgeting.