How to add Bling to Your Budgeting — it doesn’t have to be Boring!
For me, budgeting has always been too concerned with the nitty gritty of things that it sometimes failed to see the bigger picture.
Why we’re budgeting in the first place.
And if I’m honest with you it wasn’t until recently that I actually started to have a proper budget in place. One that actually works.
I stupidly avoided it all costs. I always knew how much I was investing each month and how much I would need for my expenses.
But to tell you the truth, I never calculated that figure to the penny let alone the pound.
I sort of assumed I’d always have enough money to last for the month. Until one month I barely did!
Budget to make sure you have money for the stuff that matters
Before you even start budgeting make a list of all your expenses. Then work out down how much you’re currently spending per month on discretionary things. You know — the good stuff in life!
Then ask yourself what’s the easiest area you can cut back on?
This will help you spot any weak areas. Areas you’re spending too much on.
Like subscriptions, takeouts (I’m guilty of this one!), restaurants or anything else really that you’re dishing out too much dosh on.
The 50–30–20 rule
When it comes to budgeting I’ve found this one tool to be super useful and it also helps remove a lot of the bother and boredom associated with budgeting!
The rule goes like this: you divide your monthly (after-tax) income into 3 categories: needs, wants and investing/saving.
I really like this rule because it’s simple and effective. I can’t stand complex processes and procedures! Those never seem to work for me.
The simpler the better.
So here it is:
50% goes toward expenses — these are your basic needs and will include everything from your rent/mortgage payment to your groceries and travel costs.
30% goes toward treating yourself — buying things you enjoy like a cheeky takeout here and there, a shopping trip or anything else really that you fancy spending on.
20% goes toward investing/saving — this is the most important part and the part that you should focus on the most and make sure you’re hitting. The more you save and invest, the better off you’ll be.
Most people think that the higher their salary, the richer they’ll be but this couldn’t be farther from the truth.
It’s not how much your earn. But how much you keep.
Earning money is the easy(ish) bit. It’s keeping it that’s harder.
It’s completely useless if you’re earning a fat salary but you go out spending the whole lot!
Hence, more than 1 in 3 high earners are living paycheck to paycheck. Read about that here! The trick is to control your money not the other way round.
Start climbing
Think of budgeting as a rung on a ladder.
You need to climb that rung so that you can get to the next one (saving) and the next one (investing).
Budgeting is all about directing your money to exactly where it needs to go
Without it, you’d have no clue where your money is going to and how much is actually going!
Budgeting irons that all out.
Getting serious about budgeting will also make you feel like you have your entire life together! I promise you.
It’s really simple yet so effective.
Very soon, you’ll start to feel in control of your finances and it’s precisely this that will give you the confidence to take it further by upping your saving and investing goals.
It’s best to budget for fun
As much as it’s crucial to budget so that you invest for your future, it’s just as important to budget for things you love.
Like taking that dream vacay or splurging on a cool new piece of tech. Read here how if you can’t spend now you’ll never be able to and why that’s a problemo.
If the 50–30–20 rule doesn’t work for you but you still wanna budget for the stuff you love, why not do this: each month set aside some dosh for splurging-only.
And as the weeks and months go on, you’ll be saving for this one thing (or things!) so that you get to enjoy it. Guilt-free.
Life would be too boring if we didn’t spend at least some of our money on things that make us feel good. Read here the paradox of spending — why we get the most joy when we can least afford it.
For me, budgeting isn’t about going cold-turkey on the things I love (tech and travelling, btw!) so that I can invest every penny.
But rather it’s a way where I get to enjoy things I love while working towards financial freedom.
The 2 need not be enemies.
Balance is key and the more you have of something the less special it becomes. Eventually, after that 5th takeout of the month, you’ll be used to it that it won’t be all that exciting anymore.
And the same goes with investing + saving too much leaving you with no disposable income.
Plus, we all need some colour and joy in our lives. Especially now.
So enjoy the joy of working toward your personal finance goals and don’t forget to make room for the other things.
Like experiences and all those feel-good purchases you know you love.
On that note, happy budgeting!
Disclaimer: This is not investment or financial advice. It is my opinion only. This is not a personal recommendation to buy/sell any security, or to adopt any such investment strategy. Always do your own research before you commit to any investment.
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