I know there are hundreds and thousands of blog posts, bloggers, websites, financial advisors, bankers, life coaches and many other professionals out there telling us all how to budget, why to budget and when to budget. So in today’s post, I would just like to encourage you all to embrace budgeting each month, even if you don’t feel it’s the easiest thing to do. I’m also going to share with you how we budget each month, in the hope that it will provide some motivation and encouragement for others along the way!
Our basic starting point is a list of our basic but recurring monthly expenses. As I’m not much of a spreadsheet fan, I was never too keen on doing an Excel spreadsheet for us to use so instead, we use simple tables in a Word document, and that, for our needs, is more than sufficient. So our starting point each year is a 12- page Word document, one for each month.
It’s fairly easy to maintain this basic monthly budget list. For most of us, our monthly payments remain the same throughout the year. This includes items such as your bond or rent, medical aid expenses, insurance premiums, phone subscriptions, pension contributions, savings, your emergency fund contributions, your car servicing fund or your Christmas expenses fund, etc. Unless you change cell phone providers, for example, or your medical scheme implements an annual increase, your expenses remain static, pretty much. This basic list of expenses is then copied into each month’s budget.
Next up are the expenses that we don’t have each month but only once a year or twice a year. This could be that your car registration needs renewal or your TV licence needs to be paid, for example. These are predictable expenses, and because we know which month these are due, they get included in the budget for that specific month of the year.
And next up, and probably the slightly tricky part to this as you know, are your items like fuel/transport, food and electricity charges, and these are the items that tend to fluctuate each month. Sometimes we spend a bit more on electricity, sometimes a bit less, and the same with fuel, and also with food. We have a ball park figure of how much each should cost us per month so that’s what we initially allocate at the beginning of the month.
If we spend less, great! We can save a bit more, or put towards something else that is needed. If we need to spend a bit more, then we need to adjust our remaining budget accordingly. For obvious reasons, it’s great if we can spend a bit less. I’m always happy when that happens. I can choose to buy a few more items to add to my household stockpile of items, for example, or this extra bit of money can be diverted towards unexpected expenses (our emergency fund), or we can spend that money on some fun items, if that’s what we want.
Essentially, we only really started budgeting out of necessity, on our debt free journey (you can read more about that here and here). We were certainly not this disciplined when we were much younger. Our budget still isn’t perfect, years later, and we still make slip ups here and there. We’re not aiming for perfection, to be honest, we’re only human after all, but as long as our budget is realistic, practical and absolutely doable, and we don’t overspend, we’re content with how we’re doing it, the simple way.
I also believe that the secret to budgeting is that your budget has to work for you, and you have to be willing to work with it. You, and you alone, know how much money you can afford to spend each month, and by setting a realistic budget, you won’t feel deprived and you will more than likely be able to stick to your budget, month in and month out.
If you are short of funds in your budget then perhaps you need to rethink some of your expenses and see where and how you can cut back on some of those, without compromising the standard of services you’re paying for. Can you pay for something a bit less someplace else, and still be happy with the level of service you are receiving? Do your research on what is available. We’ve had to cut back on some of our expenses as well, so that we can afford all our expenses each month. That’s also partly what Frugal in SA is all about – I share my saving tips with you as best as I can.
If, on the other hand, you have reached that point where you feel there is nothing more you can realistically cut back on in your budget then perhaps considering a side income might be worth looking into. If I need to work extra on the weekends at my job to bring in extra income, then that’s what I do. It’s not easy doing that. I do get tired and often wish I didn’t have to work on the weekends, but it is what it is. I also know that it’s not easy finding additional peace-meal jobs but I can only encourage you to keep looking, actively, and to keep your eyes and ears open for additional work.
What we’ve also found, what helps us stick to our budget each month, is that saving bit by bit each month towards a specific goal, such as our Christmas gifts and our annual car service, actually means that we don’t have to fork our fairly largish sums of money which we may not have. If you save just R80 each month, you will have R960 at the end of the year, for example, or if you save R100 a month, if you can, you will have R1200 in December. That should be enough to cover gifts or your annual car service, for example, and even if you have to add a bit more to that amount, it won’t be a large amount. Saving towards a specific goal really does help.
Anyway, those are just some of my thoughts. Do you budget? What helps you stick to your budget each month? Any advice and tips that you would like to share? Please leave me a comment and let me know.
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