How to Budget in The New Year

Since the new year is is rolling around I thought I would share some of the budgeting tips and templates that I’ve used over time. Perhaps you are saving towards a life goal like a wedding or a house purchase, school etc. or perhaps you just want to develop a habit of saving. One of my favourite quotes is, if you cant measure it, you cant manage it! Knowing how much of your disposable income you can actually save is the key to developing a better savings habit.

Even if you only have a small amount left after you pay your expenses, start somewhere! Put $500 or $1000 into a fixed deposit account if that’s all you can and then as you understand more about the stock market and investment accounts you can consider moving the funds there once you have amassed the minimum requirement – some are as low as $1,000 as well. The fixed deposit is safer, the stock market is riskier. Speak to a licenced financial advisor before investing in the stock market to see if your risk tolerance is appropriate for investing. 

 Some templates can get extremely complicated so I customized one to be a simplified lite version where you enter your net pay (after taxes and deductions) and any extra disposable income and then budget how you plan to apportion it. I did it this way because it’s easier to focus on what you have more control over.

I then made the categories simple based on how I like to think of my expenses, but you can always download the template here and then change them to suit your individual needs.

See an example below:

Enter the net income from the previous month (December) to budget it for spending in the month of January. Note that I highlighted the savings portion in red. The key to saving consistently is to pay yourself first. Once you are satisfied that you have paid off your creditors (especially those that can affect your credit report) put your savings in an instrument that preferably you don’t have easy access to. An example of one would include a fixed deposit account, an investment account, an equity fund or a unit trust.

 There is also a savings tracker included in this template, where you can keep track of the balances of your savings accounts:

NEW!

There is a new feature on the Budget Template that provides a dashboard on the Income vs Expenses for the Year. Once the sheet is populated you will be able to see the difference between your income and expenses each month. 

Tracking Your Expenses

 My secret to figuring out how to apportion it is to actually track the expenses. I use a daily expense tracker which you can download here. Each Monday I sit and review all the receipts that I have amassed over the week and I enter them into the daily tracker spreadsheet. I also have to try and remember what I paid in cash and didn’t get a receipt for, so I jot them down in a little book I walk with when I can. There are also online apps that can do this but as an Excel nerd I like to have control over my data to slice and dice it how I want so this is my preferred choice. Some apps like Wally allow you to scan the receipt and input directly, Other popular apps include Mint, Money Manager and GoodBudget. 

Here is an example of the daily tracker:

Once I enter the information on the left with my expenses by category, then it is automatically summarized in a table to the right. If you want to change the categories, then you would use the table to the right and make changes there. The information on the left is automatically picking up the categories there so you won’t be able to adjust the categories on the yellow table. 

The type of payment is also summarized to the right in case that’s information I want to be able to track as well. It helps me to assess what I have left on any credit limits for credit cards without having to go into the banking system. I also use it to check my credit card statements each month. In the past I’ve picked up on erroneous charges to my card by ensuring I track everything spent on it.

 The front of the daily tracking template has a dashboard that automatically populates once you start entering the data on the sheet as seen below:

You can easily track what percent of your income is going where and budget appropriately in the budget template. You can then see where you can possibly cut down to increase your savings. Visit my article on different Savings options here – https://financialcentsibility.com/is-your-savings-rate-beating-inflation/.

Note that I am not a licenced financial advisor and you should always seek to contact one before making investment decisions.

 All the best for THE NEW YEAR and happy saving!