Control your spending
Get out of debt , stop worrying and start living!
For the last two years, I have been using a proven method for tracking all my expenses. What Todd Green did was actually similar to my method, only I used software to implement ease and full control. Software that’s always at hand, installed on my cell and on my computer. Plus, as a bonus, I got these nice reports, perfectly illustrating what I already knew — I spend too much money on hairdressers! (“Frisør”) :-)
The basic idea behind successful budgeting is to stick to a few key principles; budget every dollar (that’s Danish kroner in my country) dividing them into nice categories, save for upcoming expenses (also called rainy days) and roll with the punches. Sticking to the method, you will be able to build up a buffer enabling you to get out of expensive debts and/or start living!
This method is more extensively described in this video from You Need A Budget, the company behind the software that I have been using:
I found, that when I adopted this method I was able to establish a monthly surplus, which I used to “buffer up” the next month. In this way I had a monthly overflow — plus I could save up for that dreadful December. Why do the Christmas gifts always end up being more expensive than budgeted (and how come my wife didn’t settle for that kitchen appliance I bought her, but wanted a nice ring?)
By “rolling with the punches” I mean that if you spend $100 more on groceries one month, you just roll with it, and spend $100 less the following month — either on the category itself, or on the total amount available in the budget. When you budget every dollar you earn, you’re always aware of the current budget for the current category. You just have to look at your cell or your desktop. And some of the categories you budget, end untouched or “over-budgeted” you could say. Just take a look at my January:
I finished my month, having spent 1,970 DKR less than budgeted, thus providing extra money for the next month. If I do so (more or less) every month, I will eventually end my year with a huge buffer, thereby fulfilling my goal: living on last month’s income. As you can see from the above, some of the subcategories weren’t used up in January. Look at “Gaver”, “Medicin” and “Restaurant/cafe” — the balance is just transferred to next month’s corresponding balance. I could also use it to buffer up the overall Available To Budget amount. Or, this way save up for that large present for my wife for our upcoming 20 years anniversary? Notice, by the way, that I overspent a little over 700 kroner, these are deducted the Available To Budget amount. This way, rolling the surplus forward.
If you have a better way of tracking your expenses, reaching a goal and building up a buffer, please let me know. A piece of paper, a spreadsheet or even a notebook could be enough for you. If you are not into those tools, you should give YNAB a try. I for sure have been learning by doing. And in the process I have developed a clear sense of day-to-day budgeting, keeping my focus on my goal: controlling my spending, getting out of debt and start living worry-free!
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