So we have settled into the new year. It is a time in which people try to make changes in their lives in order to make themselves more organized and confident. It is also a time when people receive their credit card bills from December and realize that they have spent a lot on Christmas gifts. A good way to help organize spending is by making a monthly budget.
What is Budgeting?
Budgeting is an important necessity in our lives. It allows us to keep track on how much we spend. It is important to stay on budget in order to save money and not go into debt.
https://www.mymoneycoach.ca/budgeting/what-is-a-budget-planning-forecasting
Budgeting Without Guilt
A great way to keep track of your budget is to write down the amount you spend on an item everyday. Afterwards, decide which category the item belongs to. Every week, calculate the amount of money you spend and continue to do so every week till the end of the month.
In my opinion, using Microsoft excel to help organize a monthly budget is a great idea because based on my experience, it is the most efficient way to categorize your personal budget and to make changes if necessary. The first thing to do is to put in a category (row) (ex. phone, dining), along with the amount of money you are willing or must spend on (column). If you like percentages, you can put in how much percent of the budget you are going to use for that particular category (ex. Phone) in the next column. The following column should be on how much you spend followed by the percentage of money that you ended up spending within that category. The last column should be the difference. It does require a little knowledge of math, but with Microsoft excel tools, you should be able to calculate spending costs for the month without problem.
A good strategy on not feeling guilty of overspending is to exaggerate a bit on spending; especially on non-essential expenses. For example, if you are willing to spend $150 on eating out, put $200 instead. That way if you pass the $150 mark by a few dollars, you will not feel as bad as you would if you stayed with your original scenario.
Scenario 1: $150-160= $-10 (107% of the eating out budget used)
Scenario 2: $200-160=$40 (80% of the eating out budget used)
I believe that scenario 1 works out better than scenario 2. Thoughts?
Now you have probably seen this in your economics course, but here is what I believe should be considered spending on things you absolutely need and on things that you want to spend on but is not necessarily important.
| Needs | Wants |
| Rent | Events/Concerts |
| Mortgages | Subscriptions |
| Electricity | Gambling |
| Water | Vacations |
| Phone | Expensive Clothing |
| Groceries | |
| Gas | |
| Bus Pass |
It is important to prioritize mandatory spending when creating a budget because these expenses must be paid every month no matter what.
The amount you put on your budget will vary by month. For example, you might want to expand your budget in January if you are going on vacation. In that situation, be sure to lower your budget on non-essential spending such as eating out for that month. Also expect your bank account to go down by the end of the month. This can be made up by lowering your budget. Only put in non-essential spending if there is any money leftover in the budget and do not expand it.
- Photo by rawpixel.com on Pexels.com
Robert’s Experience
In terms of saving money based on my experience, the best time to save is from January to April. This can be explained that the winter months were calm in terms of non-essential spending. The months that I have spent the most money were in June, July and December. June and July are tough because there were a lot of events that occurred during those months (vacations, festivals).
Blog Recap
To recap this blog, budgeting is a very important life skill that we should all use to keep track and save money. Budgeting should be based by month since one can expect to spend more during certain months, depending on life events.
Come back next week as the focus will be on the term “Blue Monday”. I will explain what Blue Monday is and what you can do to beat the winter blues.
Until next time, take care and thanks for reading.
Robert Toto
Blogger
Robert's blog 