I’m not going to try and go through the basics of budgeting; lots of other people have done that extremely well. So this is the bit where I get story-ish.
Childhood history … I’ve always been pretty good with money. My parents did a good job raising H and me in this regard (and in many others!) – I have memories of getting pocket money ($1 a week?) when pretty young, and tithing that at Church and being able to spend the rest of it on plasticky rings and chocolate bars. Gradually amounts increased, I had a paper round for a while, I was encouraged to save up towards big purchases like rollerblades, that kind of thing. Good foundations.
Fast forward quite a few years: I’m now through University. I have a pot of savings, mostly from gap year work – it’s been dented by becoming a British citizen (which is a pricey business!) and starting a master’s, but is sufficient to pay for the rest of my course fees and be a 6-months’ living expenses emergency fund. I have a 2-days-a-week job, which carries with it the possibilities of sporadic extra work as needed (e.g. secretarial), and I am paying rent to family/friends which means that I have the responsibility of paying it, but if everything goes wrong for C and I we are unlikely to be made homeless. I know I’m fairly good with money; I don’t tend to fritter it away. But over the last few months I haven’t necessarily known exactly where it all went … I knew it was pretty well-spent, but couldn’t always reconstruct exactly how.
So over the last couple of weeks I’ve been making tentative budgets and looking at where my money goes. And it’s been a really freeing experience. I now know why I can’t seem to save up large amounts: it’s because I’m not taking everything into account when I think about budgeting.
In my head, I budget for: rent, travel to/from work, basic food + casual bus travel, giving to Church, my mobile phone bill, and giving to World Vision. Doing this gives me a fair amount of money left over. So I feel like I should be able to save a lot.
But I’m not explicitly budgeting for: birthday presents, visiting the dentist/optician, holidays, other special events/travel, books, clothes, shoes, or meals out. Even if something only costs £10, there needs to be somewhere for that to come from … and this is where the surplus goes. Not really mysterious at all.
I still don’t have a system which totally works. I’m lucky to have enough slack in the system – e.g. still having a student overdraft – that I don’t have to worry about small slip-ups; if I end up £20 overdrawn until the next payday that’s okay.
At the moment, I’m saving to go to Malaysia with Mum in May (to see family who I haven’t seen for 8 years), so my current plan is to pare my spending down as much as I can bear, and then sink every spare penny into that savings account. I’m hoping that by having one big goal and throwing as much as I can at it, it’ll be easier to stay motivated than if I had lots of little goals none of which were being reached … that’s the plan, anyway. At the moment I’m 1/4 of the way there, and given the money I should receive between now and then my goal is possible but not easy. Here’s hoping I have the discipline to make it work.
How do you deal with money? What works for you?