Monthly Budget Advice for ‘Spendaholics’
For all of those shopaholics, too-scared-to-look-at-their-bank-statements, barely-puts-anything-into-their-savings over-spenders, this monthly budget advice for you.
And, I’m really not judging you when I say those things. I write for me just as much as I wrote for you. *insert sheepish grin*
Managing finances well is really important not just for your future self but for now too. It helps you to be disciplined and organised.
Having a stable income that supports you and your loved ones is a privilege that many, many people in the world do not have. Therefore, in my opinion it is a duty that we deal with money wisely rather than frivolously.
The unfortunate situation is that this is often what happens.
Financial literacy is something that should be taught in school but isn’t. In many cases, when a young person gets their first monthly wage they don’t know how to deal with it.
What at first seems like treating yourself (which I’m not opposed to), quickly becomes years of bad spending habits and poor financial choices.
So, here’s some simple monthly budget advice points that you can use to start getting better at managing your finances!
What is the golden rule of money?
The first point in this monthly budget advice is to always pay yourself.
After paying your necessary expenses like rent, bills etc., put some money into your savings.
Based on your monthly income and spendings, determine a minimum amount of money you must put into your bank account every month.
If it’s possible, you can save even more but this ‘minimum amount’ is mandatory to set aside every month.
If you’re not sure how much to save, there are a couple of rules you can follow: the 50 30 20 budget rule or the 70 20 10 budget rule.
Monthly Budget Advice for your Savings
The numbers in the 50/30/20 budget rule and 70/20/10 budget rule relate the percentage of your income you will be putting in different pots.
If you’re really having difficulty figuring out how to save and spend your money, you can follow these rules.
But these rules aren’t binding, and everyone will have their own percentages of managing their money that works for them.
Start with these rules and then alter the percentages as you figure out what works for you.
What is the 50/30/20 budget rule?
The 50/30/20 budget rule refers to three categories – needs, wants and goals.
This rule encourages you to spend 50% of your monthly income on your needs (this includes things like bills, groceries, rent etc.), 30% towards things you want and 20% into your savings/ goals.
So, if you were earning £2000 a month, £1000 would go towards your needs, £600 towards your wants and £400 towards your savings.
Again, if these ratios don’t work for you, switch it up but if you like the idea of separating your money into needs, wants and goals this rule might work for you!
What is the 70/20/10 rule money?
The 70/20/10 rule recommends for you to put 70% of your monthly income towards your living expenses (transport, food, housing, bills etc.), 20% into savings and investments (investments, emergency funds, growing wealth) and 10% towards paying back debt and giving to charity.
If you were earning £2000 a month, this means £1400 goes towards your living expenses, £400 towards your savings and £200 towards debt repayment/ charitable donations.
While this ratio may not work for me personally, I quite like the part of this rule that includes giving monthly charitable donations. Everyone’s monthly budget advice will be different according to their goals and interests.
If you don’t think these rules would work for you and you’d like to create your own monthly budgeting plan, the tips below will help you to achieve that.
How to start budgeting your money/ create a personal monthly budget
Track your spending
When you’re first figuring out how to create a personal monthly budget plan, track your spending by looking through your bank statements for at least the last month (feel free to look further back if you’re brave enough) and find out how you’re managing your money.
Create a small table listed with different categories for each of your spending habits and note down how much you spent in that month.
For example, one of your categories could be ‘Entertainment’ – this would include all the expenses for your social activities, take outs and more.
Don’t forget to note down how much your spending towards your ‘needs’ as well – the things that you must pay every month without fail.
Make sure you are always able to cover your needs and plan so that your ‘wants’ are within reason.
Set targets for each category
Once you have your spendings/ savings into different categories, set a realistic goal for each of them.
If you notice your ‘shopping’ category is much higher than expected, set a goal that will help you spend less but that is achievable.
Track your money management
Once you have set your goals, after your next pay check, record how much you’re putting into your savings, as well as every single thing you spent.
Basically, instead of tracking retrospectively, you’re going to track your spending every day.
Review this record weekly to ensure you are staying on track with your targets.
Make adjustments to your monthly budget plan
As you figure out your spending habits and get smarter with saving and spending your money, you can make adjustments to your plan.
As you get better at identifying ways to save money and use it for the better, you won’t even need to look at your spending/ savings tracker anymore.
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More monthly budget advice to help you make wiser financial decisions
Make spending ‘lists’
If you find it hard to not spend loads of money on shopping, make a list of all the things you want.
Allow yourself to buy things from that list every month so long as it is within your budget for that category.
This might be hard to get used to initially especially if you’re an ardent online shopper, but is a great way to save you money and spend rationally.
Also, by the time you are able to buy something , you might realise it’s not worth it anyway.
Cancel unnecessary monthly subscriptions
Assess whether each of your monthly subscriptions are absolutely necessary.
If you’re not needing a service once a month anymore, maybe more like every few months, consider cancelling the subscription if it is cheaper to buy here and there.
On the other hand, if it works out cheaper for you be on a subscription, consider the options on the company website.
Have multiple bank cards/ use cash
These are two easy ways to help you manage your finances physically.
The first option would be having different bank cards for each category.
At the beginning of each month, after you get paid, transfer the money for each category into each card.
This means that once the money is finished in that card, you are not able to spend more on that category.
If you use contactless payment a lot and notice you are spending more than expected, you could pull out cash every week and track your spending that way. That physical form of money will help you stay aware of your spending habits.
Remove small but deadly spends
Do you have any small but deadly spends? Like your daily coffee, picking things up at the corner shop often, or not really using things you buy?
Work on identifying what it is and then cut it out completely or limit it.
The Pareto Principle will really help you figure out the things that actually benefit you in life and can be applied in almost all situations including spending habits – have a read here!
Make a saving plan and set financial goals
Up until now, I’ve told you to create categories for your spending.
But once you’ve gotten used to managing your spending habits and feel that you are saving a good amount of money each month, set yourself some financial/ saving goals and start creating categories for your savings.
For example, this may include investments, emergency funds, holiday plans, big purchases etc.
Give to charity
Giving back is a great way to stay self-aware, grateful and do good for the world.
You could set a charity target where you give money monthly to an organisation/s you really support.
Gain empowerment through your finances
If you get really stressed out or anxious about dealing with finances, remember that you are in control of your money.
You worked hard for it and therefore, should be able to enjoy it without feeling overwhelmed about it.
Think about all the things you could do if you were able to manage your money well – the goals you would reach, the people you could help, the person you could be and feel invigorated by that image.
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KEY POINTS – Monthly Budget Advice For Spendaholics
- The first point in this monthly budget advice is to always pay yourself.
- The 50/30/20 budget rule refers to three categories – needs, wants and goals.
- The 70/20/10 rule recommends for you to put 70% of your monthly income towards your living expenses (transport, food, housing, bills etc.), 20% into savings and investments (investments, emergency funds, growing wealth) and 10% towards paying back debt and giving to charity.
- When you’re first figuring out how to create a personal monthly budget plan, track your spending by looking through your bank statements for at least the last month (feel free to look further back if you’re brave enough) and find out how you’re managing your money.
- Make sure you are always able to cover your needs and plan so that your ‘wants’ are within reason.
- Once you have your spendings/ savings into different categories, set a realistic goal for each of them.
- Once you have set your goals, after your next pay check, record how much you’re putting into your savings, as well as every single thing you spent.
- As you figure out your spending habits and get smarter with saving and spending your money, you can make adjustments to your plan.
- If you find it hard to not spend loads of money on shopping, make a list of all the things you want. Allow yourself to buy things from that list every month so long as it is within your budget for that category.
- Assess whether each of your monthly subscriptions are absolutely necessary.
- If you use contactless payment a lot and notice you are spending more than expected, you could pull out cash every week and track your spending that way. That physical form of money will help you stay aware of your spending habits.
- But once you’ve gotten used to managing your spending habits and feel that you are saving a good amount of money each month, set yourself some financial/ saving goals and start creating categories for your savings.
- Giving back is a great way to stay self-aware, grateful and do good for the world.
- Think about all the things you could do if you were able to manage your money well – the goals you would reach, the people you could help, the person you could be and feel invigorated by that image.
