Let me start of by saying that I have no formal education in finances whatsoever. I did accounting in school until Grade 9, after which we could choose which subjects to do for the last 3 years of school. I ditched accounting as a subject before my teacher were done telling me how important that subject was. That being said, I find it incredibly valuable to set up a personal budget and review it every month. This way I know exactly where my money goes, where I can save some more, and how much I need to make from my business.
Most of us get a little bit overwhelmed by the idea to set up a budget. It seems to be a great task to set up a detailed excel sheet with every expense and to then write down how much you actually spend, and write down this detail, and that detail and ugh… Unless you are the accounting type, and enjoy this sort of thing, a complicated budget system will make it a schlep to stay in control of our finances.
My budgeting exercise takes no more than a few minutes, and I do it monthly to stay in control of my finances. What I do, is I open my internet banking or smartphone banking app and pull a statement of the previous month. I then go through the transactions I made the previous month and write the monthly expenses down in an Excel sheet one by one. I ignore any once off or irregular expenditures like car services or gifts, the idea is that these irregular expenditures should be paid from my savings. I also ignore day-to-day expenses like groceries, toll money, and fuel. I do however budget a monthly allowance for daily expenses. You can even do separate allowances for groceries and transport. Just remember the KISS principle: Keep It Simple Stupid. In other words, keep your budget simple and small.
In order to help me stay within my allowance for daily expenses, I got myself a credit card with a very low limit and low fees which I pay off every month. There are other strategies to make this work too, and it is up to you to figure out which works for you. One of my friends withdraws her allowance every month, and keeps the cash somewhere safe. Whatever she didn’t use for that month goes back into her savings account. As they say: there are many ways to skin a cat.
So there you have it, a quick and easy way to budget and stay in control of your finances. This is by no means expert advice, but it works, so why not try it. Do you have a different way of budgeting or controlling your finances? If so, feel free to share it in the comments.