Sometimes when you dare to check your bank account right before payday hits, and you see a sad looking £31.57 sat in there to last for the week, you can get to wondering- how can I end this cycle?! The one change I made around two years ago that enabled me to start saving 27% of my salary (whilst living in London!) every month, was to start sticking to a budget plan.
Before this I had been spending my money without really keeping track of my outgoings, moving money from my savings account (which I was lucky to have due to living at home for a year after university) to my current account to try and balance things out. I set myself the target of spending £100 or less every week- this included day to day travel, food, entertainment and shopping, and even now, two years later, I still try to stick to this weekly budget plan. That said, I do allow myself a little leeway- if I want to book a holiday, a train, or buy presents for friends and family, I know that I won’t finish the week on budget… but I do like to try!
To make your own budget plan, the first thing you should do, is to write down all of your monthly outgoings and direct debits, these aren’t things that you will include in your weekly budget. Monthly outgoings include things like rent, bills and subscriptions. I personally also include other costs which I know are constant- for example I account for £100 each month to cover flights back to my home island which usually cost least £160. By accounting for £100 a month, this covers the cost if I head home every other month. I would strongly encourage you to write down your monthly expenditures as a starting point, especially if you are trying to cut back as this will show up any unnecessary subscriptions that you could cut out and save money on.
After writing down all of your outgoings you can start to think about how to tackle managing your budget. There are so many ways to create a budget plan, and since everyone’s approach to money is different, a budget plan that works for one person, might not be as effective for another- it’s important to find the right budgeting style for you. I’m going to talk you through a few different plans that you could try so that you too can start seeing a nice little chunk of cash left in your bank account before payday rolls around.
This method works for many because of its simplicity, and I’ve called this old school because it relies on a notepad, pens and a calculator. This method involves saving your receipts and noting down your spending at the end of every day- this means you can measure your spending and know exactly what you end up overspending on. By writing down what you spend each day, you can see if you are getting close to busting your weekly budget and can cut down on your expenditure. You could bring this into the 21st century by keeping track of your receipts on an Excel document, and this would allow you to easily make calculations and comparisons from one week to the next.
There are so many amazing money apps out there that have been designed to help you stick to your budget and stop overspending- we millennials spend so much time on our smartphones that we may as well use them to help us keep track of our money too! Mint is a money app veteran, and it automatically categorises your transactions so that you can see at a glance where you are overspending and where you can cut back. You can set your budget and the app will track all of your transactions against your budget. If you also fancy making a little money on the side whilst keeping track of your receipts, you can use apps like Shoppix who credit you with tokens for uploading photos of your receipts. Once you have saved up enough tokens, you can exchange these for Amazon or iTunes vouchers, or even redeem them in cash via PayPal. If you fancy getting a 200 token starting bonus, you can use my Shoppix referral code which is: DGAOXURP
Some people find that they often spend less money when they use cash because a transaction feels a lot more ‘real’ when parting with hard earned notes. It is also a very visible way of seeing what money you have left for the week. My boyfriend likes to use a cash budgeting system but also finds that on the flip side, he is still spending on cards out of necessity- for example, contactless payments for tube fares which means that some transactions can easily slip under the radar. Another style of cash budgeting is to use cash envelopes to split up your expenditure into categories- so maybe you would put £30 in a ‘groceries’ envelope and £30 in an ‘entertainment’ envelope so that you know that once you have spent what is in each envelope, that’s it for the week! It is best to plan your weekly envelopes at least a month ahead so that you can also factor in envelopes for birthday presents or train journeys that you will have to pay out for that month.
If you’ve been a bit strapped for cash recently and have not yet tried sticking to a budget- give it a try! Let me know in the comments if you find any of these budgeting methods work for you.