Flexibility or Frivolousness - do you control your money, or does it control you?
Photo by Kelly Sikkema on Unsplash
Budgeting – it's such a dirty word, right?
“We buy things we don't need with money we don't have to impress people we don't like.” Dave Ramsey
I think the meaning of budget should be freedom. Freedom to decide where your money goes, freedom to make the right choices, freedom to choose your own path. That sounds much more alluring. Who wouldn't want to budget if they were promised all of the above? Let me tell you a little secret – it can offer all these things, but it requires something in return, discipline and consistency. Budgeting means freedom, but it can take hard work to feel that freedom and see the results. However, when you can get to the stage where you can breathe a sigh of relief because you know that you know, that you know it's all going to be okay, then all those times you have chosen needs over wants, and have been disciplined, will be worth it.
Budgeting also requires regular revising, as wants/needs change all the time, and I think this is the key. Budgets can change as your needs change; I initially didn't understand this and would get stuck and then give up, believing I had failed once again. But once I understood the secret of revision and the changing needs of our lives today, I started to get a handle on it and make things happen for us!
But I am a quiet wee rebel underneath it all – and I start my advice off opposite to what everyone else says. I have heard repeatedly – track your spending for a month, then sit down and begin to work through your basic requirements and go from there. But this paralysed me, and every single time I would give up and throw the towel in, the tracking was just too hard.
Then one day – about three summers ago, I just spent the day on excel, following along with a YouTube Tutorial, and set myself up with a working budget. I already had a pretty good idea of our basic needs and requirements; it was just a matter of allocating adequate amounts to each category and then tracking our spending against each area after that. I faithfully followed this system for nearly a year but decided it wasn't enough; after working in Accounts Departments (in varying businesses) for so long, I wanted a system that allowed me to add transfers between accounts and have a little more sophistication! For the next 12 months, I used YNAB (You Need A Budget), but I found this to be very "Americanised". Eventually, I got brave and came up with my own spreadsheet that gave me exactly what I wanted in a way that made sense for me, and I have faithfully followed this now for a good 18 months. We get paid fortnightly, so I have set up tabs that cover each fortnightly pay period and have copied and pasted over the essential information in each tab for a whole year. Each week, I update our spending and ensure we're not going over the allocated amount. If we do, because I know 'real life' happens, and sometimes we do overspend, I either cover the extra with money from a different category, or I just don't spend again for a few weeks and build up the money again! Either way – it's not earth-shattering, and it doesn't hurt us; we just need to pull our heads in a little bit to make up for it!
So, before I publish the next post, your homework is to write a list of your regular expenses and figure out your exact income. No tracking, no allocating – nothing else yet. To get you started, there is a list below that will cover most family's basic expenses, but you can add your costs to this and change whatever doesn't suit:
Regular:
Groceries (including takeaways / toiletries / cleaning stuff / pet food)
Mortgage / Rent
Petrol / Travel expenses
Pocket money / Family money
Monthly/3-Monthly/6-Monthly:
Power / Gas
Phone(s) – landline and mobiles
Internet
Insurances (these can be yearly or as often as fortnightly)
– car / house / contents / life / medical etc
Bank loans / Credit card repayments
Rates – house / water / regional
Hair appointments
Clothes / Make-up / Shoes
Subscriptions (e.g. Sky, Netflix, Disney, NZ Herald, magazines, online subscriptions)
Tithe or charity giving
Savings – Yearly:
Birthdays / Christmas
Medical / Dental
Car Rego / Warrants / Repairs / RUC if you have a diesel vehicle
Kids/Adults activities (sports / music / art)
Home renovations
Savings goals (holidays, new appliances etc.)
Debt repayment
I hope this has given you a good start on your list. You don't need to break this down into categories just yet; I was just encouraging you to think beyond the day to day expenses, take into account the less common yearly ones as well, and think about the general things such as gift-giving for birthdays / Christmas, as well as clothing and hair. When you start budgeting, all these things are taken into account but often are forgotten or overlooked.
So grab a coffee and a piece of paper, and get that list started…
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