Practical Finance: How to budget like a “bawse”!
Do you frequently find yourself surprised by expenses? Do you only have a vague idea of your income and where each dollar is spent? Do you find yourself unable to save for the future, not because you can’t afford to, but because you don’t plan? Is your budget done in your head or on random scraps of paper? If you can answer “yes” to any of these questions then you have a budgeting problem and could be entitled to compensation, call the law offices of…..
Seriously though, proper budgeting is fundamental to achieving your financial goals. There’s no way I could afford all them fetes, to drink gin like Jack Sparrow does drink rum or my dream vacation to Iceland last year, were it not for detailed budgeting…granted I have no kids which also helps but that’s neither here nor there.
Right, I promised short and sweet like Lady Nadia of Batson, so here are a few tips to help you manage your money “more better”:
Get your mind right. Budgeting isn’t only about saving toward that Mr. T bracelet you eyeing by Anton’s. It should be a way of life. As your money arrives you should start planning its future like you’re its mother and it’s writing SEA.
Document your budget. Put it in a spreadsheet, write it in a copybook, put it on a chalkboard it doh matter. Just don’t try to keep track in your head. I don’t know about you but I forget things exactly one minute after I tell myself “Tana don’t forget to…” To help with this I recommend using Excel or one of dem free budget apps or spreadsheets you can find on the interwebs.
Budget for the entire year. This might sound like real work but trust me it would help you identify when in the year you have to make a big purchase or a big expense and be able to break it up into bite size pieces. What’s the saying “how to do go about eating elephant?”
Watch out for unexpected expenses. These are expenses that you cannot foresee. So paying your car insurance or car servicing aren’t unexpected but having to replace your car AC compressor so you don’t have to drive with your head outside the car when it’s raining like Ace Ventura is unexpected. Other examples of unexpected expenses are medical or pet medical expenses, major house repairs, travel emergencies etc. Some of these you can cover with insurance while others will cause you draw on your emergency fund (which we’ll tackle a next time).
Update your budget frequently. You should update your budget as frequently as you get paid and note variances from what you budgeted. If you planned to spend $500 per month in Wonderful World but actually spent $5,000, then you need to either update your budget or control your '“freakiness”.
Track everything. Review your bank statements, the little Linx slips in your jeans fobs, even the receipts from the doubles man on the corner to gather information on where your money goes. Don’t just focus on the major categories either. Some people only put the big items in their budget, food, mortgage/rent, utilities but leave out things like money for their outside woman, the gambling habit they have or their monthly trip by the lady who does torture their nether regions with hot wax just to make sure they don’t look like a Yeti.
Wants vs Needs. Separate your budget into mandatory vs discretionary expenses, that way you get an idea of what it costs for you to survive. I guarantee if you understand how much it costs you to just keep a roof over your head and you and your pickney belly full, you’ll make different decisions with the discretionary part. You’ll also know the minimum lotto you need to win to be able to defecate on your boss’s desk and walk out.
Save deliberately. Saving shouldn’t be an after thought. It shouldn’t be that you’ll save whatever is left over after you spend on everything else. If possible, it should be it’s own category in your budget. We’ll talk more about saving in a future edition.
Remember, budgeting is supposed to help you achieve your goals not constrain your life. If you feel like your budget is stopping you from living your best life then “dash wey dat” and start over. As always, read the disclaimer below and feel free to reach out with specific questions.
TANA
Discalimer: Nothing in this post should be construed as financial advice, it is purely for educational purposes. Practical Finance is not about making you rich. It’s about helping you to manage your money “more better”. So know what yuh for when you come round here! Doh ask me what to invest in or who have the better accounts.