It is time for another edition of #SavingwithSavannah and this week I am letting you in on a secret that completely turned around my mindset around money. With one simple change I managed to be much more on top of my finances, I am much more positive when it comes to money and I can still spend my coin on things I love to do most (shopping).
How?! I can hear you asking. The answer is truly simple: break your entire income down into budgets. I know, I know, I never used to get excited when people talked about budgets but they actually have a point. Let me explain…
Know where your money goes
We all have to start somewhere, and that special somewhere should always be sitting down and looking at who is taking your money. The first time I did this manually, which was quite time consuming. I created categories like bills, groceries, transport, shopping and eating out. Everything else would be miscellaneous like a drink here, a ticket to the cinema there. It was honestly eye opening to see how much money I wasted on lunches out, Uber and clothes!
But knowing where your money is going is only half of the work. That alone is not going to change your mindset (and life). I mentioned Monzo, and how it helps me to continuously track where my money is going and how much I have left for each category. I also explained that I transfer all my ‘spending money’ onto my Monzo account, this is basically everything except my bills.
Create realistic budgets…
However, even with all these insights into my spending behaviour I still felt overwhelmed and anxious when it came to my finances. Now I realise that this was mostly because I had this chunk of money that I could spend but I was never sure if I would be able to make it last until the end of the month. For months I relied on my savings in the weeks before payday, which are now completely empty. So the question would always be: is the month going to finish me, or am I going to finish the month?
Because this was only my spending money, I tried to find a way to look at this chunk of money differently. A way that would make me feel much more relaxed and confident that I would make it to the end of the month with enough money left for my weekly food shop. This is when I started dividing that spending amount by four (a set budget for each week). Sometimes the month is a little longer, but it gives me a good indication of how much I should be spending in Sainsbury’s and how much I can spend on weekends.
That’s not everything though. With this weekly budget I also create two more budgets, one for groceries and actual spending ‘spending’ money. At least this way girl can still eat even when she decides to buy another vintage designer bag! In the beginning it might be so strange to stick to such tiny budgets, compared to the big chunk of spending money you had before. But believe me when I say it gives you peace of mind when you know that this way you will 100% still have enough money left at the end of the month. Plus, isn’t it nice knowing that the week before payday you can actually still treat yourself to a few nice things?
…and sticking to them.
A few months into this system, I have now realised that every week is different but my budgets remain the same. One week I might have loads planned and buy one too many drinks, but the next I might be staying in all week and weekend spending hardly anything. This is when everything balances each other out, so don’t be too strict on yourself either. Life’s short, if you really crave that morning coffee get it! Just don’t make it a habit.
Lots of love,