HOW TO BUDGET YOUR MONEY AND LIVE YOUR BEST LIFE

I love money. I love making money, I love seeing money on my bank account, and I usually don’t have a hard time spending it. And that is exactly where I have to be careful, because if I don’t pay attention, then the hard earned money I once had in my bank account quickly dissipates into thin air. And where has it gone? In my case, it’s usually spent of Sephora – more makeup I (probably don’t) need. So how did I get to the point now at 26, living on my own, owning an apartment, and being able to travel every quarter? Budgeting!

Budgeting is actually really simple, once you have a formula that works for you. You need to be consistent, and it needs to be in your daily routine, but it is achievable for everybody.

I am going to give you my 5 best tips and tricks on how to budget your salary and not overspend what you have, as well as show you what percentage you should aim at for budgeting your monthly salary. This is a basic overview, but will really help those of you especially who have just moved out of the house, or just got their first real job!

1.       Take a look at your expenses

Before doing anything, I recommend doing some research and looking at your past expenses. Take an excel file, a word doc, or just a piece of paper and a pen, and write down all of your expenses for the last 3 months, grouped by months. So if we are in January, look back at December, November and October expenses. Divide your expenses into the following categories:

·         Rent

·         Utilities/phone

·         Food

·         Car/public transportation

·         Health insurance/health related items

·         Other (gym membership, etc.)

·         Fun

·         Savings

This way you have a good idea of how much, on average, you are spending each month within each category.

2.       Budget percentages

Now that you have looked at your past spending, here is a breakdown of what your ideal spending should be based on percentage for each category (these are calculated based on an individual living alone):

·         Rent : 30%

·         Utilities/phone: 10-12%

·         Food: 15-20%

·         Car/public transportation: 5%

·         Health insurance/health items: 5%

·         Other (gym membership, etc.): 5%

·         Fun: 10%

·         Savings: 5-10%

This is when you need to take a hard look at your actual spending, versus what you should be spending. If there is an area where you are overspending, then this is what you will need to focus on going forward.

3.       Calculate your budget

After reviewing your actual spending versus ideal spending, it is time to create a realistic budget for yourself.

For the sake of simplicity, let’s say you make $1000 a month. Calculate out your current fixed and variable expenses (fixed expenses are the ones that stay the same each month, such as rent, utilities; variable are the ones that change, such as food and fun), based on the percentages above.

Based on the $1000 salary, and ideal percentages, this is what your monthly budget should look like:

These numbers will become your “budget”, meaning this is the most you will allow yourself to spend every month.

4..       Calculate savings

Once the ideal budget has been established, ensure that the amount fits within your salary range, and calculate any leftover, as such:

The total amount “spent” based on the ideal budget is $980, which means there is $20 left over, or “wiggle room” at the end of the month. I strongly recommend that there always be some money left over, or money “unplanned”, because you never know what expenses might creep up (in my case a broken washing machine). That additional money should always be kept in your account for a rainy day. Preparation is key when it comes to budgeting, and making sure you account for all situations.

5.       Consistency

Now that the hard work is done, all you need to do is stay consistent! That means taking a journal, excel file – whatever works for you – and write out your expenses daily. If you do it daily, it shouldn’t take you more than 5 minutes.

What I recommend is creating different categories (like we did above) and each day add the amount you spent to the category it pertains to. Here is an example of what you could have spent on Monday:

·         $330 for rent

·         $5 at the grocery store

·         $5 for lunch

·         $10 for gas bill

·         $5 at the movies

·         $50 savings

Here is how you would add this to your chart:

If you are a guru at excel files, you can create it in a way so that when you input your spending, it will automatically calculate your “total spent” and “total leftover”. You can also just calculate this manually every day, although that might take a few extra minutes. I have created an easy excel file that I use with my clients to calculate their budget - you can reach out to us for more info about this here.

By checking this every day, you keep yourself accountable and make sure you are on track! When you see yourself getting close to the budget amount, you will know you need to take it back a notch and eat dinner at home instead of going out, or watch Netflix instead of going to the movies.

At the end of the month you can see your progress, what changes you need to make, and how you can better spend your money and take that with you for the next month!

If you found this post helpful, let us know! You can also reach out to us at doubletake.lifestyle@yahoo.com if you want 1-1 coaching services and support with budgeting your money - we have a handy dandy excel file that we can help you fill out.