This series consists of my extremely honest experience with money, my beliefs and how they are reflected in my lifestyle. It is by no means perfect, but I hope these posts can resonate with anyone who is also navigating through life in their twenties on their own.
My relationship with money was shaped by fear for a very long time. I certainly did not grow up poor, but it was something that seemed to be always lacking. Once I graduated from high school and became aware of how much my parents had been supportive of my education, my primary goal became to be free from their help. I finally became somewhat financially independent moving into a gap year I took from school to do internships, although I wasn't able to save any extra money. I then ended up getting a pretty huge student loan to go abroad for graduate school, and that made me feel even more afraid of money.
When I got my first job after graduating, I felt extremely relieved to see that now I was able to start saving money, and pay back my student loan. I could maybe upgrade the cheapest chair I got from Walmart that was hurting my back. I could maybe buy a little plant, some paintings to make my space cozier. But at the end of the day, the most drastic change was that I didn't have to automatically choose the cheapest dish of the menu when I go out for dinner - well, now I tend to go for the second or third cheapest dish, but I guess we can still call it a progress.
But even when I was able to save money, my somewhat obsessive habits continued, dictated by fear. I was still writing down maniacally every single expense I made, I was looking at my bank account balance more than three times a day hoping I could save money here and there when there was nothing I could do, and the worst day of the month was the "rent day". Maybe these are actually good habits for saving money, but for me, these were making me feel anxious. I was aware that I was extremely lucky to have a stable income, but I just didn't want to go back to the time when I was scared of not being able to afford my bills.
It took me a long time to realize that I didn't have to be so hard on myself, and that I could still feel content and stress-free with a solid budgeting plan.
Even when I was living on a minimum wage from my internship, I was saving money to afford cheap buses and trains to travel. It was the one thing that was making me feel rich, not of money but of experience. This remained my main priority, and where I decided to allow myself to "splurge" money on. Good quality groceries are another story - I insist on buying ~95% of my groceries organic, so my grocery bills are pretty high, but this will be left for another time.
The template I am sharing can be a backbone for you to refer to and help defining your priorities. My budget takes into account the two priorities I mentioned above, but yours can be certainly different and you can play around with it. Here is my little walk-through of the template, so that it becomes clearer to categorize your expenses and get the most out of it.
** All budget / salary values are random so not real. I am willing to disclose what I actually spend money on in a future post :)
** The template is in Excel format - you can use it on google spreadsheet!
The template has two types of sheets: yearly and monthly.
Overview sheet will literally give you a great overview of your yearly money flow.
January/February … I like making one sheet per month because I like having a monthly summary of what I spent money on and reflect on it at the end of the month. For each new month you can just duplicate the previous month's sheet and adjust your budget according to your needs.
Monthly Budgeting
What is in the monthly sheets? I mainly divide the categories into three:
1. Fixed Cost
This is something I have to pay every month, and for which I know the exact amount (or more or less, when it comes to electricity/heating) I will be paying. For me this includes:
Rent
Bills
Subscriptions
Donations.
2. Variable Cost
This is something I spend money on every month, but values fluctuate. I put food-related cost in here as well, although it could be considered as a fixed cost, because if I'm traveling or seeing my family I know in advance that my grocery / restaurant bills won't be the same at all. That is why at the beginning of the month, depending on my plan, I budget food cost as well. This category includes all the other expenses:
Food (groceries, restaurants, coffee, etc.)
Transportation
Sports
House items
Personal items (books, clothes, etc.)
Gifts
I try to break this down as much as possible to understand what I am really spending money on.
3. "Exceptions"
This is a room I give to myself for events that do not happen monthly, whether it be traveling or medical appointments. I try to plan for them so that those expenses don't stress me too much - this also helps me to avoid putting in whatever extra I want to buy during the month in this category.
What you will need to do is to fill out the Budget column with the amounts you want for each little category. Throughout the month you can update the I spent column (I usually do this every Sunday), and the Left to use column gets updated automatically. Depending on the time of the month, the Left to use column allows you to see where you are at, and if you have been overspending. If you get reimbursed for whatever reason (health insurance, friends sending you money back...) you can enter that value next to the Reimbursement cell, and that amount will be deducted from your spending.
After budgeting, there are rows for your income - I get paid bi-weekly so I put 2 rows, but again, you can adjust them as you want. Then you will automatically get the Summary value that is basically your income - expenses.
Yearly Budgeting
Once we are done with the monthly budget, we can transfer everything back to the Overview sheet. Some tips to use the sheet:
There is one row per month, other than the very first row which represents the status of your money at the beginning of the year. Fill out this first row with what you had at the beginning of the year from all accounts and cash.
$$ Spent: I copy over the value from the other sheet. For instance, for January, the total spending is indicated at cell F21 under the January sheet. So I will enter the value =January!F21 (='SheetName'+'!'+'CellNumber') which will automatically copy over the value and will be updated as the total expenses get updated.
In a similar way, I update $$ Earned by entering =January!B28 for the month of January.
$$ Remaining will then automatically show you what remains.
The rest is up to you ! I usually log how much I save, and how much I invest. I also sum these up just to see at the end of the year how much I actually end up saving and investing. In addition to logging the raw amount of money I put aside, I also log the exact amount of money I have on my chequing account, in cash, and in different savings and investment accounts, because I know these will fluctuate with interest rates, the stock market, etc. I do this to have an idea of how much I exactly have in total.
Below the yearly review, I sum up the current amount of savings, investments and cash. I update this at the end of every month, so what you will have to do is to change the formula so that it points to the specific month you want to refer to. In the template, I put it to point at February, so putting all the cell row numbers to 6. (J6, K6, etc.) You will just have to increment the row number by 1 after each month!
Knowing your priorities, and what you value is a first step to better understand your expenses, and plan for a lifestyle that suits you. I hope this post will help you build a solid budgeting plan in a simpler, stress-free way.
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