Was thinking I’d arrived. There I was in my early twenties, just moved to London with a well-paid job in IT. That was the 80s. We all (my friends at least) spent on stuff – cameras, gadgets and whatever we wanted. But the credit card bill soon caught up with me.
I was months paying that baby off! I hadn’t arrived. I was a financial fool being paid too much. And like any other financial fool I thought so long as I could pay the minimum payment on the card each month, I was ok. But even back then London costs were high, rent and travel and going out. I eventually did come to a point when I realised I had to control my spending.
I hadn’t really thought much about the word budget, except occasionally when the UK government announced a new taxes on fun in the budget. And I don’t think my parents were any different to other parents: they paid the bills and didn’t share the details with us kids. But I realise now they must have had some form of budget.
Gradually I finally dug my way out of my credit card debt. But I’m not sure I learnt many lessons. For years I have had what they refer to as to much month at the end of my money. Luckily I have managed to not go back into any real debt; of course I’ve had car loan (now paid off) and I do have a mortgage but I have avoided major credit card debt. But I never got any real control over my money until we decided to track our spending.
We had started to worry about the future for our daughter, what would she do? Where would she live? The usual stuff. So finances become a bit of a focus. On top of that we were utterly sick and tired of getting nowhere. Budgets, tracking spending, always seemed to me like making life boring. If you have to count money so hard you can’t be having any fun. But by then we were realising that because of a lack of money we weren’t exactly having a lot of fun or living the life we wanted either.
We spent the first month just making a note on a spreadsheet of everything we spent. Nothing else. Not trying to control our spending. Diligently logging everything, and then being appalled at the end of the month when we could see how much was being spent on things we did not actually need.
We did this for a second month. By the end of it we could see patterns emerging. Wasted money here, there and everywhere – definition of waste: not getting any enjoyment out of the spend or it not being part of the essentials like food, electricity or mortgage.
The third month we set up a budget. We divided our income for all the things we needed to pay for that month. Mortgage came first. Then the bills. Food . A guess at what we would spend going out. And a mindful attempt to not squander money on things that didn’t add to our lives.
We didn’t stick to it perfectly. Our guestimates still needed refining. But what we did get was a sense that we were in control of our money. As the months passed, the budget got better and better, and we felt even more in control. We have now got to that stage where, having taken control of our budget, we can actually put money into savings quite easily.
So what I’m really saying is that my biggest budgeting mistake was not having a budget. A budget gave me back control over my own destiny, and I know that’s a big word! But when I’m not in control of my money, like many others I worry. My mind drifts. When my mind is all over the place I am not in control of my own destiny. (Maybe this says too much about me being a control freak!) But I know I’m happier when I’m not worried.
And even now, as I feel we have our budget under control, we still track our spending. Technology helps. We use an app called Wally to track spending. We log food shopping, petrol, going out, everything. Then transfer it to a spreadsheet to get our monthly totals.
I don’t think there’s any right or wrong way of doing a budget. And it’s not as hard as it sounds. All it takes is to log everything we spend, and then make rows on a spreadsheet for each thing we spend on – rent/mortgage, electricity, gas, water, travel, food, and going out.
Over the next six weeks in this Planning Ahead series I will share more about what we do and how it has helped us. More importantly how it is helping us plan for the future for our daughter. But for now, if anyone wants to give me feedback on what you think about budgets, I love to hear. Even if it’s just to prove to myself I’m the weird one.
Post your thoughts on our Facebook page and use #budgets before your comment so we can all follow the conversation.