Are you new to setting up and using a budget? If you are, then this post and subsequent ones are for you. I’m going to suggest that you check with one of my favorite bloggers who is passionate about setting up a budget and sticking to it. The link is below for the guru of budgeting Rosemarie Groner. Her post makes budgeting easy to understand and with humor too. She is the one who introduced me to blogging and helped me along the way when I became stuck. Her blog is amazing and filled with good useful information on making your money stretch farther than it has ever gone before.
If you are used to setting up a budget but things are still not right, you will be happy for this post in the series.
So let’s get back to the point at hand. Do you get a notification from your bank sometimes that you have gone into overdraft? That means that you have actually spent more than you have in the bank! Not a good scenario at all! It may even be that your debts (including regular bills) are more than the amount coming in (income). The short answer is that you shouldn’t be spending more than you earn.
The long answer is that there are several strategies that you need to put in place. I will help to show you little things that you can do to ensure you don’t continue to make this mistake. There will be different parts to this topic.
- It takes patient practice
- Take out your savings first
- Keep all receipts and monitor them weekly
- Challenge yourself to a no spend week (avoid impulse buying)
- Plan plan plan: meals, entertainment, even hairdressing, plan it all
- Plug all the gaps where your money is seeping away (some bills can be stopped, lending money etc)
You really need to sit yourself down and have that ‘talk’. No, not that one.
You need to convince yourself that you need to do better with your finances. And even when you do fall back into the old habits and fail, do that pep talk again. You will not win this budgeting battle the first time you try it. It will take some patient practice. It might be a good idea to get used to writing things down- your income, as well as all the money you are required to pay out.
The more you get used to seeing the figures, the clearer it gets.
This is a controversial one but I can only advise you on what works for me. You see, I believe in saving first. If I do it the other way around, it means I am depending on the gods to shine down on me and save me some money while I am spending and paying bills etc. At least if I ring fence my savings first, I’ve got it.
Mind you, you must be realistic about the amount that you should really set aside for saving. It all depends on your income and expenditure. No use saying you will save half of your income if your expenditure is more than half of it.
Keep all receipts
The truth is, for some people, it is more impactful to see all the receipts for all the spending you do. It is true that if you could see it that way, you would agree that some of your spendings were unnecessary and some downright wasteful. Seeing it that way helps you to avoid silly spending in the future.
It is similar to telling someone who is overweight to keep a tally and all the empty wrappers and packaging for all the foods they are eating. Do you get the point? I hope you do.
A no spending week
This is actually easier than you think. If you already have all the necessities, like groceries etc. for the week, any other spending is over and above your limit and is usually wasteful. I have a good friend who doesn’t carry money around with him. In fact, he doesn’t even carry a wallet! His argument is that he has budgeted for all his groceries and other bills for the month, so his money is in the bank waiting to be sent out for these.
He claims that in the past when he used to walk around with money, he would find himself spending it on little things like a drink if he was passing a shop, giving money to a child whose mom proudly announces that it is the child’s birthday, or to beggars on the streets. What do you think of his frugal ways?
Well, I’m actually (secretly) impressed. I tell him to his face that he is tight, but his mortgage is paid off, he was able to retire at 50, and he goes on overseas holidays just as much as when he was working! The fact is that he is determined not to spend any money outside of what he has to, within his budget.
Whilst my sister has pledged that she will not buy any new clothes this year, I think a no spend week should be in order for me. What do you think? Have you ever tried any such thing?
Plan Plan Plan
As with most things in life, your spending habits are better controlled if you plan them. My friend Julie at Filling the Jars, swears by planning meals in advance. I have seen a lot of these ideas floating around on Pinterest and I am convinced. Some people plan and prepare their meals for weeks at a time. What do they do with it? Well, they purchase freezer and microwave safe containers, some of which are re-usable, and then package the meals, allow them to cool down, and label and freeze them. Julie swears that it saves her not only on time but on money as well because the groceries can be bought in bulk and used up rather than left to spoil and be discarded. I know I am definitely going to do this more often. At the moment I only do this with jerk chicken for my crazy Jamaican food lover child, and soup for the rest of us, especially in winter time.
Plug the gaps
If you find yourself going into overdraft too often, then there definitely are gaps that you need to plug. You need to look into the more obvious things like switching off and unplugging appliances when they are not in use. Then, you will need to look into shopping around for cheaper (or more cost effective suppliers) for some of your energy supplies. I have some other amazing tips for you here from my friend JT from Just Making Cents. As a former Wall Streeter, he shares useful tips on how you can make and save money too.
But check this out, if you are one who let insurance and other such bills automatically renew, you are leeching money away as easily as that.
By the way, my sister and I recently made a saving on home insurance. Usually, these smart insurance people send you a renewal pack with the new price for the policy which is usually more than the previous year! Part of their statement goes something like this: ‘you do not need to do anything…’ I abhor that. Because in effect what they are saying is that they already have our bank details so they can just withdraw the money from our accounts. So we decided on a plan. We each, in turn, called them up, told them of our dissatisfaction about the rising cost and that in fact we were unhappy with the cost from the previous year and would not be renewing with them unless they reduced the price from the previous year. Well, of course, they do not want to lose the business so they oblige. Result! So my advice, don’t let anyone just ‘dip’ into your account. Take control of your hard earned money.
I also had a Utility Company pay me. Yes, you heard that right! They paid me. I have an annual service plan with them for electrical equipment. When I make a date with them to do the service, I hold them to their word and I also value my time. So if they arrive very late, or not at all, I make a consumer complaint, ask for them to escalate the issue and then charge them for the time I had to spend at home waiting in vain. In the past, I have had either vouchers or money from them as compensation.
It is about time that we all really take stock and manage our money better. We need to make plans for financial security now as well as for the future. Budgeting does not come easy at the start, but the more you do it, the better able you are to continue doing it. Making a budget and sticking to it will become almost second nature. Check out this post from budgeting guru Rosemarie Groner. Do your best. Let us know how you get on.