International Share Your Budgeting Secrets Day
Today is International Women’s Day and everyone is celebrating. Google changed it’s logo; UN Women sent out an important message; and, if you haven’t already seen it, 100+ female personal finance bloggers are dedicating posts to the first annual Women’s Money Week. I am honoured to be on that list, with so many of my smart and inspiring peers.
The topic for today’s posts by participating bloggers is budgeting. It should come as no surprise that this is the topic I relate most to but, for new readers especially, you may not know how long it took for me to finally create and stick to my first budget. In telling you my story, I hope you will learn that it’s ok to fail in trial and error; it is not ok, however, to give up. Here’s where it all started…
Track Your Spending
When I first started blogging, this idea sounded ludicrous. And, at first, it’s not easy to remember to keep all your receipts or check your bank account daily. In fact, some days it feels downright annoying. But it takes time to figure out what you’re really spending your money on. I wrote weekly spending reports religiously for 5 months, before I finally felt comfortable enough to write out my first monthly budget. Because I tracked my spending for that long, I knew exactly what my monthly averages were, which made it easy to write (and stick to) my first budget.
Categorize Your Purchases
At the end of each month, I go through the weekly spending reports I publish on here and place each dollar amount in a category. You should have fixed expenses (rent, bill payments, etc.) and other expenses (food, gas, entertainment, etc.). Where you place each purchase is up to you. For example, my “personal care” category includes everything from vitamins to birth control and tampons (sorry, fellas). After a few months, you’ll start to see that your fixed expenses are generally always the same but your other expenses, also known as your wants, can fluctuate. This will help you with the next step.
Give Yourself Some Wiggle Room
Based on what you tallied up in your first few months of tracking, try to write your first monthly budget. My trick is to not base it on the exact amount I’m going to take home but at least $100-200 less. For example, this month I will probably take home about $4,070, but I’m using $3,770 for my March budget. Why? Because my last paycheque is being deposited on the 30th. I’ll need some of that money in April, right? Pay attention to the dates of your paycheques and what you may need money for in the first week or two of the next month. And, if you have a few dollars leftover, place them in “cash” or “miscellaneous,” rather than removing them from your budget altogether. This will help if you go over in a few other categories.
Work With What You Know (and Love)
Six months ago, it would have been ridiculous for me to say I wasn’t going to hit up a Starbucks or Tim Horton’s for an entire month. Since managing a Starbucks back in 2007, I have been a heavy espresso drinker. But, after months of tracking my spending, I could finally see that I was wasting $65-85 each month on take-out coffee. That used to be the monthly interest on my credit card debt! And I was pissing it away on a beverage. To slow down my take-out coffee orders, I put a “coffee” category in my monthly budget. In December it was $50, because I knew I would be more likely to go out and indulge in holiday drinks with friends. This month it’s $0, because I want to put every extra penny that I can on my credit card debt.
Be Open to Evolving Your Budget
What does this month hold for me? is the first question I ask myself, before starting any monthly budget. How many birthdays will I be celebrating? How many loan payments are coming out? Is there anything I want to do for myself? and so on. If I’ve been depriving myself of something for months, I make sure to open up a category (like “clothes”) every few months. I may only give myself $30 to spend but, when I know that I’m sick of not being able to buy myself anything, I know it’s worth moving a few numbers around to make it happen. This not only helps me stay on track with my budget but helps me avoid impulse buys.
And that’s that. In honour of International Women’s Day, I hope you will not only share this post with some of your favourite women, but I dare you to talk about money and budgeting with someone in-person today. That’s right – I said I dare you! Personal finance bloggers write and talk about money online but even we should be dared to talk about it in-person more often. So, today, ask a girlfriend what she thinks she spends on groceries in a month. Or ask her if she knows how to get a better rate on a credit card. And tell her your best tip for saving at the till. Rather than compare ourselves, or judge each other, on how much we each save or spend, I dare you to share your best kept secrets with the most important women in your life.
Start a discussion! The more knowledge we share, the richer this world will be.