I realised that no matter how many times I created a budget, it never seemed to work for me personally. So I decided to create a budget that suits me and is honest.
I could never understand why some months I would still be over budget. When I was downloading budget templates, I was not being honest with myself. Not accounting for everything just the everyday essentials of running a home, but not allowing for those unexpected bills or repairs. So I decided to create a budget for myself and realising that I had to be totally honest with myself. This did not happen overnight, as it did involve monitoring my outgoing closely every month and listing everything. No matter how small the expense was.
Fed up with having to watch your pennies each month
Over the years I have created many budgets. Even though I felt pleased that I had created a budget, I still found that by the final week of the month I was having to say no to the simple things. To be honest this made me feel crap as there is nothing worse than having to keep saying no to your child. But at the same time, they have to realise that you are not made of money and they cannot have everything all of the time.
How your budget can help meet your financial goals
The first step to create a budget that worked for me was to ask myself what my end goals were. For me, this was to save for weekends away, day trips with my son and also holidays.
To help encourage me to stick to my budget, I printed a photograph of our dream holiday. I also gave myself a realistic time scale in order to save for this holiday. There is no point, creating a budget that is unrealistic as you don’t want to fail before you have even started.
Your budget will not work if you still impulse buy
Have you heard of the 30-day rule? I had not but I found it very interesting. Try it and see if it works for you, when you are shopping and you see that item you want.
This is how it works.
- If you feel the urge to buy on impulse, no matter what it is, make yourself stop. If are holding it, put it back and walk away. This may be hard but just try it.
- When you arrive home, write down on a piece of paper details of the item you wanted to buy. This includes the store, price and the date.
- Place this note somewhere you can see it every day. For instance near the kettle, on the fridge, calendar. Whatever works for you
- Over the next 30-days, ask yourself if you really want this item. But do not buy it.
- After the 30-days ask yourself do you still want to buy this item? If so think about how you are going to pay for this. Do not purchase this on a credit card.
How long does it take to create your perfect budget
Realistically I do not think you can create the ideal budget overnight. Yes, you can create a reasonable draft that may work on a temporary basis. If you are going to be really honest with yourself this may take up to a month, maybe a couple of months. This does not matter so long as you meet your goals.
I decided I was going to monitor my outgoings over a 2-month period. I kept every receipt no matter how small it was. This may seem silly, but it does work and you can soon see where the odd £5 or £10 is spent very easily.
This will help you to create that ideal budget for you. Keep all of the receipts safe, file them in a small box or clear pocket.
I purchased a mini receipt organiser and divided into sections. This was ideal for quick storage of receipt to be reviewed later. Plus being able to divide into sections such as essentials, miscellaneous receipts to non essentials. Allowing for ease of reviewing and sorting at a later date. I found this less daunting than just leaving receipts piled up on the site, where they can easily be lost.
There are many different types of receipt organisers available, I tried several different types but I found one more suitable for my needs. I did not want to spend a lot of money either. I did find this cheaper than stationary shops or the cheaper chains.. I recommend this receipt organiser because there are many different sections. This enables you to split either type of purchase such as food, misc, clothing. Or you can split then per week. It is also A6 size and tucks away nicely in your top draw. Click here to view more information for the receipt organiser.
Divide all of your receipts into essentials and non-essentials. You will be shocked when you start to look at your spending habits seriously.
Ask your family to be involved in creating a budget
Personally, I feel that it is essential that everybody that lives with you should be aware and be involved in your budget. My son is 9-years old and he is involved. We discussed how we want to spend our time together, day trips, holidays and the odd takeaway treats. This has helped us create a budget we are both happy with.
We have discussed how we can reduce our spending and set our goals for the future. This may seem odd but it can be fun. When we go shopping together, we create a game as to who can find the cheapest food product to buy and test them. The winner can choose a treat for the following weekend. This may only be a bag of popcorn with a film at home, but we enjoy it.
We also cook together and create a takeaway menu. For instance, we make pizza for each other, it is fun and cheap.
How to start creating a budget that works
Once you have created your goals the next stage is to create the first draft of your budget. I found 3 months worth of bank statements and compiled a listing of all of my fixed outgoings. I checked that they were consistent over the months and ticked them off.
Although I always monitor my bank account, this for me was a way of double checking that nothing was being taken from my bank account that I had forgotten about. Or even an increase in a bill that I was not aware of.
Fixed monthly spending
- Mortgage / rent
- Gas / Electricity / Water
- Home insurance
- Life insurances
- Loans (including car finance)
- Car Insurance
- Fixed contracts for TV
- Mobile Phone Fees
- TV Licence
- Pet Insurances
Variable monthly spending
- Pet Food
- Personal care (Toiletries)
- After school club fees
- Credit card repayment
- Car maintenance
- House Maintenance
- Vet bills
You may have a few more but just add them to the list.
When you are creating this listing, look ahead. If you have children we are all aware of when we have to purchase school clothes. Think of trips you have planned, and make sure you include these in the socialising or clothing sections. There is no point skimping on details or not being honest with yourself.
At first I decided to produce a budget on a excel sheet, but this did not really work for me because I did not want to be entering data onto a excel sheet every day. I decided to purchase a budget book which enable to me keep located in my kitchen as was easy to sit down and track expenditure.
There are many different types available and I did try several but they did not meet my needs. I wanted a reasonable priced weekly tracker for every day use. This then enabled me to review each week and enter onto my main monthly budget excel spreadsheet.
The budget book I recommend is combined for weekly budgeting. You have a day to day section which is clearly labelled and is brilliant. At the end of each week you total this to a summary sheet which is then transferred to your monthly income and expenditure section. It is so easy as you just transfer the total outgoings in full not as individual amounts. If you would like to see my recommendation then please click here to view from Amazon
Review your expenditure
Once you have completed your full listing, look at your variable expenditure and I expect a few on your fixed expenditure. This is where your budget can start.
- Review your TV packages, can you reduce them? Do you watch all the channels you are paying for? Call all providers and try to negotiate new lower prices. Be sure you have done your research on other tariffs prior to you call as this will help you. If not be prepared to leave them.
- Car insurance. Can you allocate a proportion of your budget to pay your car insurance in full instead of monthly? You can save over £50 and up to £100 if you purchase a couple of months earlier than you need. But obviously, your insurance will not commence until your old insurance has expired.
- Can you reduce your fuel bills? Are you using your car for local journeys that you can walk to?
- If you have credit card debt, allocate the highest payment against the card which you are paying the highest interest rate to. If you do not need them don’t carry them or even better cut them up as they are a false economy. If you do not pay them off straight away you will be paying a ridiculous amount in fees.
- Can you reduce your mobile phone bills? Check when you are able to renew.
- Pet insurances can you reduce these?
Check as many comparison sites as you can for special offers and the cheapest deals.
Final stages of budgeting
The next stage is to confirm your total monthly income. This will include any net wages (after tax, National insurance and pension etc), maintenance income anything really that creates your monthly income.
Offset your monthly expenditure against your incoming. First must be your fixed costs and then offset your variable costs. The variable costs are last as these are the ones that you can reduce if need be.
This may seem a very simple procedure but offsetting your fixed costs first allows you to see how much you have left each month.
After you have offset all of your income against your outgoings you can see how much you have left. It is then you can choose if you want to increase your savings or allow yourself some additional luxury spending per month.
Allowing for luxury spending per month, if you want to reduce your outgoings, in an ideal world you could cease this expenditure. Maybe only allow your luxury expenditure every few months as a treat. The months that you do not spend this money, transfer this to a savings account. This will then stop you from being tempted.
If you outgoings are higher then your incoming, then you must review all of your expenditure again. Check to see where you can reduce costs and make those phone calls and negotiate if you can.
How to break bad habits when food shopping
Pull everything out of your food cupboards and list them all. Do not leave anything out. Including your fridge and freezer.
Check expiry dates, as you will be shocked how many things will be out of date by several years. Throw them away.
Create a food calendar with your current listing and just buy additional food that will help you create additional meals. Create an active shopping list on your pinboard or on your phone, as you finish items add them to the listing. View my personal choice from Amazon, this not only allows you to plan your meals, but there is also an area you can list items for your next shopping trip as you run out.
Do not go food shopping without a shopping list or when you are hungry. Yes, we all make this list but how many times and you left this list at home, or not even looked at it whilst shopping.
Stick to the listing, do not detour be strict with yourself.
Shop around more, especially food shopping. An example is Marmite, I cannot stand it but my son loves it. IN a normal supermarket a 500g jar is £4.00, I found the named brand for £2.50. £1.50 saving and money in my pocket. Take into consideration the location of shops, as you do not want to be reducing your food bills but increasing your fuel bills. Think carefully and plan.
Stop buying branded food. For instance, Heinz baked beans, yes we all love them but I refuse to pay 65p when I can purchase the same for 25p. Which to be honest you cannot tell the difference. TRY different brands and don’t be afraid.
I hope that you have found some of these tips useful. If you think this may help others then please share. I would love to hear from you and find out how you are getting on or any other tips that may help.