(As seen in the March '22 Issue)
Q: I’m paying my own bills and struggling with money management but I really want to start saving up. Any advice?
A: Budget sheets! I haven’t learned anything about budgeting until I started a job at an accounting company. There I did in fact write a blog about budgeting, and then tried the tips I wrote about myself. The biggest tip in that being making the most use out of free internet resources – meaning the free budgeting sheets you can find all over google images. I would use one that has a ‘monthly income’ on the top (so you can see how much you earn) – including all your income. This includes wages, allowance, and any other income you may have. It’s best to have this for money that you get monthly – as you would your wages for example.
You can make a template yourself, or use one off google, but either way it’s best to personalise it to apply to you directly. For example if you only have one income, or if you have more (or less) outcomes.
First thing you will need to do (after making/printing out your template) is to write down a list of your outcomes. These are the things you need to pay. This may include your rent, phone bill, travel cost, food, subscriptions services (for example Netflix, Amazon Prime, Disney+), ‘going out’ money etc. Bear in mind that the first 2 or 3 months will be the hardest as you may forget some things you pay for in the first month or two, and will need to add them to the next month’s sheet.
Write them down in a list, and then add them up to see the total outcome.
Now, you have a choice to make as there are plenty of budgeting methods. The top two are zero-based or flexible budgeting.
Zero-based budgeting means you put a certain number on your spending – take all of your outcomes to limit your spending. Let’s say that you work part time and earn £600 a month, and your rent (living with parents for this example) is £100. Your other outcomes (travel, going out, birthdays, subscriptions etc.) come up to £350 a month. That’s £450 of your £600 income spent. Add another £50 for emergencies (prescriptions, extra journeys etc.) leaving you with £500 spent and £100 extra. You would then put the £100 into savings, leaving you with £0 to spend outside of your budget.
Flexible budgeting is when you calculate your savings money into your budget. For example, still earning £600 a month, your outcomes (rent, prescriptions etc.) are £450, leaving you with £150 – or £100 if you put away the £50 for emergencies. The difference is you’re aiming at £60 savings a month instead of putting all your leftover money for savings. Therefore you are left with £40 that give you flexibility – it can be used for whatever you want. This includes treating yourself to new clothes, extra going-out money, put in as extra savings, or anything else!