If you don’t like spreadsheets or budgets, you may want to skip this one…
Over the last few years I have been developing a budgeting system in an Excel spreadsheet, which breaks down my income into:
- Monthly Bills
- Yearly Expenditure (including Holidays)
- Credit Card
- Short Term Savings
- Long Term Savings
- Disposable
The numbers (all 52 items) get added up, rounded up and allocated accordingly in preparation. Even with this much planning, there are times when the system has to go into a fluid state (balance available does not match expected balance). In that, there is a lesson: always expect a problem, and know how to handle it.
The other lessons I’ve learnt while budgeting are:
- Give yourself spending money for every holiday you take
- Inflation will always rise costs every year
- Small rises can be handled by the buffer created by saving for yearly spending
- You can always start small and increase it later
- Try to move bills from monthly to yearly where you can
- Because having money already makes things cheaper
- Car insurance is a particular target, the APR is higher than my credit card
- There’s perspective in seeing that NetFlix costs 0.5% of your budget
- But also that it’s £83 a year