#1 Use a spreadsheet
It’s a good idea to have a written record of your budget, which you can refer back to and adapt as needed. I use an excel spreadsheet, as it’s versatile enough to allow me to change my spending plans when necessary. On this, I record the nature of the cost (e.g. rent), the amount, frequency of the payment and whether it’s money going in or coming out, so I have a clear overall picture of my finances.
#2 Think in tens
It can be annoying having to deal with random numbers, so I’d advise you work in multiples of ten when calculating spending. Say I pay £356 for my rent. I’d always round up to £360, as it’s easier than accounting for that extra £6 in my calculations. The added bonus of this approach is that it’ll give you spare cash in your bank account – as you won’t spend that extra £4 – and this money can really add up over time, giving you a financial cushion that can ease the burden of unexpected costs.
#3 Identify regular costs
If you know what you’ve definitely got to spend that month, you can budget around this and get a good overview of your financial situation. There’s the costs with set amounts – e.g. rent, phone, bills etc. Then, there are the things you know you’re going to spend money on, but you don’t have to pay a set amount. For example, it’s not set in stone, but I know that I’ll spend around £20 on food per week, so I account for this in my budget, meaning that I have a good idea of what cash I’ve got left.
#4 Budget for everything
It’s time to get paranoid, or as Mad-Eye Moody (a teacher to one of my favourite literary characters Harry Potter) would say, to practise constant vigilance! If there’s even the vaguest chance you’re going to have to pay out for something, account for it in your budget. By doing this, you’ll make sure that should you have to pay out, you can, and if not, then you’ll have more cash in the bank!
#5 Always overestimate
It’s better to be safe than sorry, especially when you’re totting up your expenses for the month. As an example, when I budget money for nights out at drinking holes such as Bar 21, I always put aside £80 as Manchester is an expensive city. Just to be clear, I rarely ever actually spend £80 on a night out but if I do, I can cover the cost, and if I don’t then I have some extra cash in the bank!
#6 Calculator, I love thee
It sounds pretty obvious, but when you’re adding up your expenses, and taking it away from the total sum of your bank account, always use a calculator. It can be tempting to do the sums in your head, but this is how mistakes get made – mistakes that could be costly if you make them too often. You should have a free calculator app on your phone; there’s no excuse not to use it for budgeting.
#7 Cash is king
Avoid spending on your card at all costs – cards are the enemy of the skilled budgeteer! If you spend on your card, it’s hard to keep up with how all those costs are adding up, making it far more likely that you’ll blow more cash than you were ever planning to. Cash is truly king in this game folks!