I could write a post telling you all how to budget. But that would be against my first principle, which is that different methods suit different people. So I will tell you how to budget if your name is plonkee â€“ i.e. how I budget.
Before I started my first proper job, I had to guesstimate how much all the bills would cost. I picked a ball park figure of Â£400 per month. I then guesstimated my rent at Â£200 per month and my general spending at Â£200 per month. I decided that Â£300 would be saved. This was my first ever budget. I have no idea if I stuck to it as I didnâ€™t track it at all. I do know that I managed to accumulate a bunch of money in savings.
Since then Iâ€™ve refined the system somewhat. The first refinement came in actually using the amounts that I paid for the bills to estimate them. I also switched to direct debit, so Iâ€™m less likely to mess up and not pay them on time. The second refinement was to put all this into a spreadsheet and create a zero-based budget. That is that I allocated every single pound to something â€“ including a healthy category for spending on fun which currently stands using the spreadsheet as a template, varying according to the circumstances, and then tracking what I actually spend each month. I think I got the idea of a zero-based budget from get rich slowly.
This is how to budget if your name is plonkee.
- switching from stakeholder pension to sipp
- cash burns a hole in my pocket
- budgeting tip: make it automagical