Money

MONEY: How to ACTUALLY STICK to your budget

How to FINALLY stick to the budget you make...

By Sara Ellis Jack

Three years of surviving on monthly pay has taught me a few tips and tricks about budgeting. Yes, I still live on tuna and rice for about a week leading up to payday, but I have at least learned how to manage a basic budget, put money aside for travel and save for a house (well, maybe just the letterbox?).

Unfortunately, budgets are essential to manage spending and saving in the millennial stage of life. One day, we’ll all be earning millions of dollars to spend on eating out every night because we cbf cooking, but right now, we need them. So here are my tried and tested tips to budgeting.

#1 – Creating The budget

The most important thing to consider with a budget is that it has to work for you – this is worth doing your research on.  I use an Excel spreadsheet from a template on the ever useful ‘How to grow the fu*k up and act like an adult’ here. This gives you a good foundation of categories for your budget – great for beginners. I still use a variation of this, three years on, and adjust it in relation to my spending habits (this is crucial!) and income each month.

For the more tech savvy, there are many budgeting apps. Check out some of the recommended ones from Investopedia. Some banks also have good budgeting apps/budgeting tips too, such as Westpac’s CashNav app. I’m even told that you can get your own financial advisor. (But, not going to lie, I’ve never actually used an app: I like my spreadsheets, but hey -worth a try!).

#2- Sticking to said budget

This is undoubtedly the most difficult part of budgeting.

Firstly, I recommend creating separate bank accounts under your main account and naming them. When you get paid, transfer your money to this account to be used for this purpose only. Currently I have food, beauty, entertainment, emergency, rent and savings. If I overspend on food one week, I’ll spend less the next week. So if my budget is $100 a week for food and I spend $120, then I’ll try spend $80 the week after. I have trained myself not to borrow between accounts. It’s going (surprisingly) well. But if you do this, make sure you never borrow from your rent account!

Secondly, to help with the ‘training’, take out the part of your budget you regularly overspend on in cash. I found entertainment was the hardest thing to stick to – I unnecessarily spend a lot of money on coffee and gluten free muffins… Having cash in my wallet means I have a finite amount to spend. Plus, it gives me greater visibility about how much money I have left, without logging into my app. Well worth a try!

Thirdly – be prepared for difficult situations. Let’s take what I’m sure is a familiar scenario; You’ve set aside $80 a week for ‘entertainment’ (this is my actual entertainment amount), but there’s brunch to pay for, movies to go to and your friend has just invited you to dinner at the Grill…

There’s no way you’re going to be able to do all of these things on your weekly budget. So do you:
a) Say no because you’re super disciplined
b) Put it on your credit card because that doesn’t actually count (right?)
c) Borrow from something unimportant in your budget like ‘petrol’, or ‘food’?

Obviously the best answer is a, but this is much easier said than done and temptation is always going to be there. I suggest budgeting above a normal entertainment budget for the month if you know you have something like a birthday dinner to pay for – forethought is always key.

Alternatively, you can always suggest a cheaper option of entertainment instead of *insert ridiculously expensive activity*. I’m a massive fan of picnics, potluck brunches and walking catch ups. Lastly, you can always pull money from the less important budget accounts – for example, if you’ve underspent in beauty, you can ‘donate’ this money to your entertainment. Once again, never EVER borrow from you rent account.

To summarize; give the budgeting apps a go, be gentle on yourself and remember that it may take several tries to find a system of money managing that works for you.

Keep up with Sara here

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