Keeping track of your money is perhaps the single most important first step in achieving your goals no matter how big or small. It’s fundamental (no pun intended) to creating a better life for yourself and those around you if you want it too. I believe budgeting should be an essential life skill that everyone should be forced to learn during school and by their parents. It’s a shame that this part of life is not taught by schools the majority of parents however it’s very easy to learn on your own. Budgeting is simply keeping a record of how much money you have as well as keeping track of income and out goings at any given time. It’s that easy. The most effective way is to create a spread sheet to organise everything. Yes it can be done with a notepad and pen but there will need to be allot of changes as time moves on and also the added bonus of using spread sheet software is that you can program calculations which work out totals, percentages, averages etc. If you are unfamiliar with such software then YouTube has countless video tutorials and there is free spread sheet software to download if you look around. Google has something pretty cool to work with. Don’t pay monthly for office software.
Combining budgeting and a calendar you can work out finances over a period of time which is fantastic for planning long term, saving and making sure you don’t end up short if shit goes sour. It took me a long time to really grasp this idea of keeping track of money because no one I know or grew up with knew about this sort of thing and the saying is you are only as rich as the five people closest to you is as true as it gets. You must take control and even if it’s just you with no idea, just do it anyway. Making mistakes is part of the learning process and many times I’ve screwed up budgeting for a week or month and gone without all sorts of things. During my trial period of keeping a record I made countless mistakes that resulted in no food for a few days, or no electricity, or internet. My number one rule for this is that the budget must be adhered too without question like some sort of insane oppressed religion. If a mistake is made and there is not enough for an expense then tough shit James, you go without. The fridge is empty… the lights are off… lunch is missed. What I am saying here is that going without that extra purchase this week is going to rack up in the long term and you will save money but don’t be crazy like me and go without food.
Planning is key to a successful future regardless of occupation or salary. Budgeting will allow you to create a better future… period. Whether it be putting some money aside for a meal in a restaurant next week, saving for a house or any other sort of goal in however many years — this will help considerably.
So the first thing you want to do is write down your most stable income first. This could be job earnings, dividends, illegal ice cream flavour sales, anything that brings in the ‘scrilla’ as they say. Once you have done this, create another list of all of your expenses. For example, utilities bills, maintenance, rent, mortgage, ice cream fund, internet, food, fuel costs, everything that takes money from your income amount. What you want to do now is try to reduce those costs as much as physically possible and yes some extremely difficult decisions will have to be made but make sure survival cost is covered. Survival is all the basic stuff you NEED and not want. Once you have done this you can now look at what can be done with the remaining funds. Now this can really hammer down the situation some might find themselves in and speaking from experience, yeah it can hurt and feel like you’re trapped. – Especially when there is so much to blame. My parents before they split did not have a clue, the area I grew up in was a stinking shit hole with no opportunities, the majority of the people were the same all stuck with this fucked up mind set. Blame the government, blame the Tories, blame politics. I remember vividly not having food, never having the clothes I wanted and don’t even get me started on family events. But… this is not a rant as these are just a few examples of the things you could or would want to blame. Yes a few outside factors could play a big part like parents or being born into a shitty situation. This does happen but once you are at the age to see this, you can then make the future better. It becomes your fuel. This is where you need to be unrelentingly brutal with yourself.
Are you a product of your environment or is your environment a product of you?
If money is tight then income needs to be improved, if money is tight but income is average then costs are too high. It’s that easy. There are many ways to improve your income and reduce costs but it does take a shift in how you think. Make a flask of coffee before going to work instead of purchasing them during the day. Make lunch for work instead of buying it at a convenience store. Ditch the gambling habits, scratch cards, lottery tickets and binary options. (nice little dig there) They are all bullshit and when you learn about the psychological stuff behind what drives people to do these things it’ll blow your mind. Learn about these things, learn about your situation through books, reading online but only from multiple sources as some are biased and just incorrect. Learn about saving, investing, talk to your boss about how you can help the company further or you could directly ask for a raise, actually… talk to your boss! Fear of someone in or of authority is a pretty bad way to live your life. Authority is a resource. Ask management how they do what they do. I once heard from a rather awesome dude living in South Africa that your dentist is not the ruler of all things, your dentist is there to serve you. See how it flips around? – Ask to transfer to a different department because it’s outside your comfort zone. An employer should see that you want to make progress and not just wanting more money. Filling your pockets comes from filling your mind. You could go to college or university if you want to earn a higher salary.
You can never ever lose by investing in yourself. Whether it be time, money, education or sitting down for a few minutes at the end of the day to quickly go over how much you have coming in and going out.
And I have one very important concept to share… if you are receiving a pay check weekly or monthly and when you have your budget totally rock solid then have your savings or investment funds directly and automatically taken from your pay into a locked account. You can use this to clear debt if you have anything outstanding or even better use this to invest in various assets.
I’ve included a simplified version of my personal budget sheet along with some notes which you can download here. Numbers are fictional. – Budget Entry Example
Have a good evening!