Are you making a budget?

In this post I’ll talk about how I budget for the wife and me and the difference it’s made to our financial understanding.

When did I first make a budget?

Before April 2018, I’d never attempted or gave much thought into making a budget. Additionally, I had never really had to use Excel, so I was starting from scratch.

Why make a budget?

Simple: To know where your money is going.

Budgeting has enabled me to understand what The Wife and I spend our hard-earned green leaves on. It has helped us to make financial adjustments to our life, for the better. We make better choices when we are at the supermarket, buying flights, eating in or out etc. It has provided a financial consciousness that I never previously had. It allows us to be more consistent with our month-to-month spending. Splurging doesn’t exist. Thoughtfulness purchases do. There are no shocks when we check-in to online banking.

How did I first make a budget?

There must be millions out there, online. I dunno, just tap into Google: ‘budget spreadsheet’ or something. This is what I did. I downloaded a few but because I was useless with Excel, I struggled to edit and adjust them to meet what I wanted out of a budget. A budget is only useful if helps you, the budgeteer.

There was nothing for it but for me to go to my two buddies, Youtube and Google to start to figure out how to achieve what I wanted and to create the budget that worked for me. A real-life problem solver… An engineer on teacher’s pay. I might change a light bulb tomorrow. Jokes aside, I am still very basic in my Excel knowledge and I’m certainly not using it to its full potential, but I do have something that works for me, which I tweak every now and then.

For contextual budgeting clarification:

  • I work overseas but get paid in £ sterling
  • The Wife works too but she gets paid in Singapore Dollars
  • I have a UK account which pays for UK expenses – this is reflected in the budget
  • Our day-to-day expenses are in Singapore Dollars

When first starting out budgeting, using multiple currencies made it difficult for me to decide how to track our expenses. Like I said, I couldn’t find a spreadsheet that met my needs and if it did, I didn’t have the wherewithal to use it.

Here is a picture of my very first full month’s budget in May, 2018:

It’s a little all over the place and it may as well have been written on paper as all the figures were entered manually apart from where I could use the ‘Auto Sum’ function. I could proper boss the Auto Sum. Go on then. Give me a column of numbers you want adding. I’ll smash them! If anyone asked for a subtraction using Excel, I’d have told them it was impossible ; )

However, what’s important to note is that I had started to wake up, financially. My financial unconsciousness was becoming unconsciousnessless… or conscious… Whatever. For the first month ever, I had made a budget and followed it. We were pretty rigorous too. I viewed the budget as something I had to beat. I didn’t want to go over in a column. Reaching $77.60 in the booze category in the first two weeks meant that I couldn’t have any more… But that’s the most important category, right?

To me, it felt like a success at the end of the month and in many ways, it was a success. The Wife was less enthusiastic about living on a budget as I was. She felt constrained. She was right to feel that way as I probably talked endlessly about the cost of ‘this’ and the cost of ‘that’ and questioned every purchase we made. I must’ve been a proper nightmare.

How has my budget evolved?

Fast forward a few budgets and by October, it looked like this:

All colour coded and fancy. Half is in £ and the other half is in $. Still a work in progress but something that was simpler and much more efficient than before. Now, I did find someone’s idea online that I liked, and I used his model to create mine. I didn’t download his although it might be available, I just copied and altered it slightly for my use. The original can be seen in the guy’s YouTube videos. His name is Denis and he runs Tru Financials. He posts regular budget planning and review videos on his channel. He’s a pro when it comes to living on a budget.

How does it fit together?

The Green section shows what my income for the month was. This is followed by the Cost of Living section which only covers my Direct Debits and regular UK expenses. The differences are setup to automatically calculate. See, I’m learnin’.

Next comes the debt section. The only regular and ongoing debt we have is the mortgage. The blue box represents our liquid cash – money that is accessible in the event of an emergency. The purple section is our investments with AJ Bell and Vanguard. Both of which are inside the tax wrapper.

The green section is the lettuce the wife brings in. Yum, yum! The Dollar expenses are next and kept separate as these cover our day-to-day spending. The ‘Actual’ columns are automatically calculated by the green section (below).

The ‘Breakdown’ is the section where I input all our receipts throughout the month. They Auto Sum at the bottom (bold green) and they feed into the ‘Actual’ column mentioned previously.

My final thoughts on budgeting

  • Budgeting provides clarity on spending.
  • The more you do it, the simpler it gets.
  • Your budget must work for you. If you set your sights too high (in terms of saving money each month), you may risk leading an unhappy and unfulfilled life.
  • If you are in a partnership (marriage, for example) you must be both involved and on board with the process – I can’t emphasise this enough.
  • The value of your money increases. Buying a bottle of water for £1.50 when you know you should have just filled a Timmy Toppy at home just hurts that little bit more.
  • You become less wasteful.
  • The budget is not something to ‘beat’. Sometimes, unexpected expenses or opportunities arise, and you just have to go with it. Don’t be kicking yourself for not being at or under budget.
  • Knowing what you spend enables you to make cutbacks in certain areas. This lets you do other things with the money you save.
  • There are no shocks when you look at your bank statement.
  • I appreciate that budgeting is not for everyone, but I would be in no doubt that it has certainly helped The Wife and me.
  • Budgeting doesn’t have to be done on the computer – there are many YouTubers that record their budget in handwritten form.
  • Finding simple ways to spend less on things and stuff that have no major impact upon the quality of your life is like getting a pay rise. You can spend that money on something that matters. Missing that coffee on the way to work could make a little difference. The little differences do add up.

Do you budget? Let me know, if you want.

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