I’ve always been careful with money but since I set myself up as a full time freelancer I’ve had to become even more careful. While I love freelancing, there is always a sense of job insecurity, so it’s imperative, for me, that I keep a close eye on my finances and know exactly what’s going on in my bank accounts.
Throughout my years of learning to manage my money properly I’ve accrued quite a few tips that I want to share with you today, in case you’re looking to get more control over your money and learn a bit more about budgeting.
My budget takes the form of the following simple steps:
And it’s that simple!
I take my total income for the month and remove the cost of my fixed outgoings for the month (rent, phone bill, Netflix, Bertie’s pet insurance, food, petrol etc – things I know I have to pay every month). Next I remove whatever amount I’m putting into savings that month and transfer it to my savings account there and then so I’m not tempted to spend it.
What you’re left with after removing savings and outgoings is your disposable income for the month and, for me, this is money I can spend on whatever I want. Whether it’s make up, nights out, clothes or books – that’s my guilt free money to enjoy without any worries.
You might be happy to leave your budget here but I like to undertake one final step, where I divide my monthly disposable income by four, which leaves me with a weekly budget.
For me, having a weekly budget is so useful, as it means I don’t spend all my money in the first couple of weeks and spend the last half of the month scrimping around with nothing in my bank account. Knowing my weekly budget also helps me gauge the value of certain purchases and cuts down on impulse buys. Say I’m eyeing up a £100 pair of shoes and my weekly disposable income is £50, I might balk at the idea of spending an entire fortnightly budget on one thing.
Also, I do a bit of monthly forecasting and see if I have any big events coming up during the month that are going to cost a fair bit of money – if I know I have a big shopping trip planned in week three of the month, I’ll save something from weeks one and two, so I already have the money put away and don’t have to worry about overspending.
I know some people find the subject of personal finance a little dry but I love not having to stress about money and not having to worry about overdrafts and loans. Everyone’s financial situation is different and I’m lucky that I don’t currently have to think about dependents or mortgages, but I’ve found a great system to work with what I’ve got and enjoy living within my means.
I hope you found something in this post useful and I’ll be posting again soon about my top ten tips for sticking to your budget.