7 Simple Tips to Master Your Budget – Joanna Louise Harris
“Pay yourself first”
I read this phrase in so many articles while researching the best way to make a personal budget and savings plan. “Pay myself first?” I thought. I had bills that needed to be paid first. Food to buy and new friends to make. I was alone in a new city, now wasn’t an easy time for scrimping. “Pay yourself first” seemed like a luxury I couldn’t afford.
It was last August that I started my budget spreadsheet. Money was incredibly tight; my marriage had ended so I’d taken a new job in a city on the other side of Sweden with the equivalent of about £2000 in my account with which I needed to pay rent and make last for two months until my first paycheck would arrive.
I set out to make my budget spreadsheet as strict as possible. I wrote down all the expenses I could think of that would be coming up during the month, added a savings goal and felt pretty pleased that I already seemed to be nailing the whole budgeting thing. I quickly realised I’d left some crucial things like cosmetics and household items off of the list and decided to change my strategy a little. That’s when I started with tip 6: Pay yourself every week — I gave myself some spending money each week that was unrelated to all the other things in my budget and bingo, it actually started to work! I managed to get through those two months with about £300 left (I didn’t eat anything other than cheese wraps for about 2 weeks however) and since then I’ve been on a budgeting frenzy (and no more cheese wraps).
It’s one year later and the tips I’m sharing below are the things I’ve found work best. Sometimes it’s difficult to live by a budget, but since starting I’ve felt liberated. I don’t have to bite my nails wondering whether I’ll make it through the month. I feel in control of my finances and each month gets easier and better.
Set goals that you believe you can achieve but that are a little out of reach. You want to push yourself so that you are driven to be just-thrifty-enough but not so much so that you forget you’re a human being with wants and needs that are important to look after too.
I set myself 3 goals last year: Create a 100000 SEK buffer, take 3 mini trips and feel financially secure.
The first was to give me a concrete sum to aim for, something I could monitor. The second was to allow myself to still have fun and be OK with spending money I could otherwise be saving — budgeting is hard and it can quite easily get you down when you have to say no to so many things — be realistic and reward yourself! The third goal was the most important to me and the real reason I needed to start the budgeting way of life — my stress level was constantly through the roof because of money struggles since moving to Sweden in 2016, something had to change.
And stick them up somewhere you look every day —you could tack it to your bathroom mirror or keep a post-it in your wallet. The important thing is that you remember why you opted for the filter coffee instead of the vanilla latte, why you’re making the longer walk to the cheaper supermarket instead of the one in your apartment building or why you’ve asked your friends to come over instead of going out out.
When you’re out and about and can’t remember how much you allotted for the food shopping this month you don’t want to make any rash decisions and end up disappointed later. Pick a tool that works for you. I use google sheets because I can access it easily on my phone and also on my laptop. It can be a little finicky to set up the sheet on the phone but it’s fine for checking and changing numbers here and there. It also means I can show my planned vs. actual budget to see where gaps are forming and adjust accordingly.
It’s easier to stick to your budget if you can actually see the money you’ve planned to set aside, actually set aside. I have multiple savings accounts with my bank. They don’t have anything special about them — there’s no interest to gain or lock-ins stopping me from accessing my money— just the ability to put in and take out as much as I like. Give your accounts meaningful names that reflect your budget sheet. This way you can make sure the totals on your sheet match the totals in your accounts and keep on top of any unexpected spends. The important thing is to keep as little money in your spending account as possible. When bills are about to come out, put the money in from your bills account or when you’re to get a hair cut, move some money over from your “personal grooming” account. The key is to be able to see how much money you’re working with at any given time.
Don’t try to budget an entire year in one sheet, give yourself a fresh start each month — perhaps last month didn’t quite go to plan, reflect on that and try a different tactic the following month. Some things I’ve found helpful are to write a savings goal for the month at the top of my sheet, display how much was left from last month, list my income and my planned expenses this month and let the spreadsheet calculate whether I’m on track. It’s important that you write each planned expense individually (for example, home insurance, rent, hair cut, birthday present for dad) and you’ll soon see where you need shave off some pennies.
This is my top tip! I keep all of my “top-up” money in a different account and I pay myself from that every Friday. When you’re setting up your budget each month keep in mind which weeks you have certain things planned — a weekend away, a night out with friends — and make sure to plan a little more top-up money for that week. When I first started budgeting I manged to get by on about £100 a week, that included things like food shopping and going out with friends, coffee on the go etc. Now that I’m feeling a lot more financially stable I’ve increased that amount. And the best thing:
Every Friday feels like payday!
It’s okay if you need to update the budget throughout the month, just be mindful about hitting your targets. I started over-spending earlier this year which meant that I sacrificed a few hair appointments and subscriptions (luckily hair appointments in Sweden are a huge expense so it saved quite a lot of money!) but I didn’t beat myself up about over-spending, I just recognised that I needed to adjust my budget so that I wouldn’t be caught out by my new lifestyle again next month. Let your budget evolve and change with you.
Happy budgeting everyone!