Last week we introduced you to Emma Flaherty, aka the MoneyGirl, our resident financial whizz. She had so much useful advice to give that we decided to take up just a smidge more of her time. This week we’re keeping it simple, as we asked Emma for her five tips for starting a budget.
I don’t know about you, but each month I start with great intentions to budget. But I never do. Suddenly, it’s only the second week of the month and I’m Googling how long you can live with only one kidney. There’s just always so much craic to be had, and with the summer coming up the craic is only going to get mightier. (For the non-Irish among you, craic means fun and not drugs so no need to call the fuzz 😉) In spirit of trying to be a responsible adult, a budget may be our only salvation to ensure we’re not watching from the sidelines. To help us kickstart this new life, we turned to Emma.
Help! I’ve never done a budget before, where is the best place to start?
The best place to start is with what you know already. Download your last 3 months of bank statements either online or by printing these off in-branch. Go through each purchase with a set of multi-coloured highlighters (or if you prefer, create a spreadsheet online) and put them into three sub groups; NEEDS (Rent, Travel, Bills, Groceries etc), WANTS (Gym, Takeaways, Nights out, New Clothes, Trips etc) and FUTURE (Deposit, Pension, ISA, Study, Travel etc).
Apply some logic, if the WANTS are costing you more than your NEEDS or your FUTURE then it’s time start shifting the balance. Cleo, Wally, Pennies are all really useful apps to show you how much you’re spending each month.
Now that you understand your spending habits you can then create your budget. What are you budgeting for? This will influence how much you put away each month or in other words how much you’re willing to sacrifice in order to reach your goal. Start by looking at each outgoing and working out how you could have got a cheaper deal or if you can cut back on it entirely. Set yourself a realistic but punchy figure that you want to save that month or when you’re next paid and review your progress regularly. Keep a reminder written down somewhere to encourage you to keep going with it.
There are heaps of FREE budget planners online that are easy to download.
Five Tips For Starting A Budget
- Be honest – get your priorities in order first and focus on what you want.
- Be realistic – failing is off-putting, we all know that. If it’s not realistic that you’ll be able to live on €50 for a week don’t set that as a target
- Be sensible – are there things you could save money on? Bringing homemade lunches to work, taking public transport, and cutting down on takeaways are all great ways to save
- Be creative – if you’re noticing that a LOT of your money is going on nights out, it’s time to change it up. Have friends over instead for dinner and a movie. If you go pot luck style it’ll cost you even less, you won’t have to queue for the bathroom AND you’ll be at home so no need for a taxi at the end of the night. Winning.
- Begin – there’s no reason to wait until the end of the month. Start looking at what you’re spending money from today and make a note of where you can make savings
Massive thanks to Emma from all of us for giving us her insights. If you enjoyed this, check out her top tips for setting up an emergency fund, and investing for beginners. And if you’ve any other tips or tricks that have worked for you remember that sharing is caring and pop those bad boys in the comments.