Here’s my confession: I’m not “good” with money.
I was brought up with the mindset that “money comes and money goes” and to try to do with what I had at the moment. For a 10-year-old getting birthday and Christmas money, this is not a bad mentality. However, as I began to experience how difficult it can be to earn a paycheck and had to start thinking about feeding myself, paying tuition, rent, utilities… I have come to appreciate the art keeping track of where my money comes from and where it goes. And so for the past 2 or 3 years, along with all my other new year’s resolutions, I’ve had some variation on the (rather vague) vow to “learn how to budget”. Like many other resolutions, I try for a few months and then it falls by the wayside as the year gets more stressful. This year, I’m trying something a little different: I’m inviting you on my journey to get better with money. My hope is that this can be a mutually beneficial situation where the publicity of my trials keeps me accountable and you can get an honest review of tips and resources that help with keeping a personal budget.
Tip 1: Establish a spending baseline
If you’re like me and just buy things when you need them, it is likely that you don’t have a clear idea of how much you spend in a month. So my *hot* tip for getting started on a budgeting journey is to spend a month keeping track of all your expenses and income. This way, when you try to create a budget, you have an idea on how much you spend on say, groceries.
How to Get Started
I started January with a plan and a Microsoft Excel spreadsheet. The spreadsheet was empty and my plan was to keep track of my spending through the month of January. One of the problems I have had with budgeting in the past was jumping into a new app or downloading a budget spreadsheet and then immediately getting overwhelmed with all the questions that were asked. On this attempt, I wanted to start out with an idea of how much I was spending in a month before I started trying out any shiny new tools. So for a month, I kept every receipt I received and entered it into my spreadsheet, making sure to put a date and a description. By the time January ended, I had a very messy spreadsheet but I had managed to keep track of every transaction.
The next step was to organize that spreadsheet. I tried to group expenses into broad categories like housing and food. Afterwards, I singled out the expenses I was likely to repeat in February as shown in the images below. After I was done with the money I had spent (and berated myself for how many times I ordered on DoorDash) I repeated the process for all the money that had come into my account.
Tip 2: Be Completely honest about your spending
The idea of a budget is nice and all but I cannot imagine that it will be of much help unless you are completely honest with yourself.
Reflecting on Your Spending: My January Conclusions
What they say is true. The little bits of spending do catch with you – maybe if I didn’t spend as much on coffee I could have paid off my student loans by now (LOL). Jokes aside, I found it really helpful to see the areas that I’m spending more than I *think* I should be spending… and it’s only been a month!
I also found the idea of starting with a blank spreadsheet document so refreshing. I felt compelled to make sure I populated the document and it made everything so clear. However, if you like a bit more structure, you can find some helpful Excel templates here and here.
Over the next month, I’ll be trying to experiment with different spreadsheets formats and looking for one that works for me. I’ll be writing-up the entire process so be sure to check back for any updates.
Resources Consulted:
American Consumer Credit Counseling. (n.d.). The What, Why And How Of A Budget Plan. https://www.consumercredit.com/debt-resources-tools/budgeting/why-use-a-budget/the-what-why-and-how-of-a-budget-plan/
UBC Student Services. (n.d.). Financial Blanning. https://students.ubc.ca/enrolment/finances/funding-studies/financial-planning
Vohwinkle, J. (2020, October 6). How to Make a Personal Budget in 6 Easy Steps. The Balance. https://www.thebalance.com/how-to-make-a-budget-1289587
