Let me be honest, I have always been having trouble getting my spending under control. I tend to over spend month after month and that is slowly but surely chipping away at my savings. Last month I have decided to embark on a strict spending diet.
My first step is to lay out what are my annual expenses:
- Road Tax
- Motorcyle Insurance
- Insurance payments on yearly cycle
- Online services that are on a yearly cycle
This amount I divide it by 12 so that I know how much I need to put aside to make these payments when the time comes. This way I know I won't be scrambling when a huge bill comes.
Then lay out my monthly fixed expenses:
- Pocket money for my parents
- Insurance payments on monthly cycle
- Charity giving
- Phone bill (Each month might fluctuate but it is mostly +/- $10)
- Money that I am setting aside for fixed yearly expenses.
These are done using Soulver on the mac so that I see the numbers right away. Once I have those numbers I will start divding my remaining cash into different categories:
- Debt (if any)
Don't forget to add categories for any specific expenses that are coming up for that month. I added a Kickstarter category because I know a project I have backed is due to be funded next month. Any money that is not neatly assigned to a category will be placed in the miscellanous category, that is effectively your slush fund.
Then once that is nailed down. I enter my budget for the various categories into Back in Black on my iPhone to keep track of my expenses. The amount that you assigned for each category is not exactly set in stone you can adjust them as the month goes. The idea is to not ever needing to withdraw money from your savings.
In addition to the planning that I have done above, I also maintain a few bank accounts. I would have one for savings - this account is only meant for input and never output. This is the rainy day fund. I would also have one for my daily spending. Then I have the 3rd account where I transfer money into for every credit card purchase I make. That way I would not mistake the "excess" money in my spending account as extra money. It is money that is already spend but not taken away from you just yet. If you have any debts, it would be good if you can seperate these into their individual accounts if at all possible.
Check out Standard Chartered Bank's e$saver account if you are interested. With no minimum sum to maintain and no debit card issued to you, it makes it perfect for my purposes.
As much as I can I would plan my budget for the next month as soon as I can, that way I can view ahead and decide if I need to save more for any particular month. One example, my pre-order game is due to be pay up in November so I can set money aside for it in November or earlier if I can. Regardless, with the help of my plan, this month has been within my budget so far. I will check in again and let you know how my plan went.
UPDATE: I have successfully kept within my allocated spending budget for 2 months running. Here's to continued success in financial control.