Hello there everyone! Today I am here to challenge you. And really, also to challenge myself. Lately I’ve been trying to sort out my own budget planner and noticed the amount of detail that usually goes into it. This is one of the main reasons why some of us don’t do a full budget and only budget parts of it, like ‘Housing and bills’ or ‘Food and takeaways’. It works for some people who are very disciplined in other spending areas, but it doesn’t work if you overspend somewhere else and then don’t know what to do with your budget the next month.
This challenge is perfect for someone who is just starting out with budgeting and is struggling to predict how much money they will need for each of the areas of their budget to make a realistic plan. When we are creating a new budget, we want to have some information to make all of the decisions from. These decisions may include how much money you will spend for groceries next month, or how much money do you have in disposables that you want to save. Of course all of those may create a headache or two, if you don’t know where to start from. And let me be clear – you won’t know where to start if you keep looping in the constant ‘I don’t want to waste too much time on a budget’ and ‘But where do I start’.
So here is the challenge – fill in all months spendings and incomes prior to the next month from now. So, for example, we’re in July right now, which means that you would have all Jan – Jul months filled in. And here is how my budget looks like right now, before completing this challenge:
You can see that I head a little head start already. It is because technically you can make estimations on your previous month amounts. It may not be very accurate to do that though because that doesn’t make you aware of how much you spent in previous months. For example, if I spent all my money on candles last winter, I may want to start saving now to not get into the deficit next year, and that will affect my budget right now.
Day 1. Preparation
You need to get statements of transactions for all the previous months of this year from your bank, or be ready to use your mobile banking effectively. To get statements, simply contact the bank and they should send it to you by post. On the mobile app, however, you don’t need to wait too long to see your statements, so you might as well skip this part.
Then you also need to have a place for your budget. I use an excel template, but you can make your own or do it somewhere else like on paper.
You can download the budget planner template I’m using in the example above here:
Day 2-6. Filling In
Now that you have all that we need, the rest should be easy. Have a look at the first month’s transactions that you’re filling in and start recording each one of them into a separate category. This is where excel is better to use than paper based budgets – because you can calculate sums as you go along.
For example, if the first transaction belongs to groceries but the next one belongs to car repairs, then you can open the cell for groceries with an ‘=’ sign and leave it until you find another grocery trantaction. That way you can go through every transaction one by one and ‘tick them of’ as you go. If your statements are on paper, then it’s even easier because you can literally cross them off.
And the reason why I’m asking you to tick them off, is because so you don’t have to look at the same transaction twice. It should be getting easier with every transaction, not harder!
The goal is to sort out and fill in all of the spending and income in your statememnts into all previous months slots in just 4 days. It is deffinately doable!
Day 7. Totals
It’s the finish line – total your incomes and spendings per each month. And by that I mean not all of the months together, but for each month individually. You want to see how your values changed throughout the year – this is the whole point of this challenge.
Congratulations! You made it though! I am really proud of you.
So now that you have a lot of information to analyse and reflect on, what can you say about your spending habits over all the previous months? Can you spot some trends, like spending more on food during winter? Can you spot some anomalies, like spending a lot in one month and then going back to normal the other?
All of that plays a role when you are deciding with the budget for next month. It is good to know of what you’re capapble of, it can give you an advantage in setting up a comfortable plan for yourself – the one that will help you with your financial goals but also where you won’t need to sacrifice some joys in life.
Hope that helped with getting on top of your budgetting! When I complete this challenge, I’ll update this post and post my results on the social media. Let’s see what we came up with then!
Thank you for reading this post, I’ll be back to you with more money wisdom’s for artists tomorrow!
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