Build a budget

Build a budget

Disclaimer: This post is in collaboration with People’s Choice Credit Union.

I wasn’t always good at saving money. When I was at university, I was burning a hole in my wallet and desperately wanted to go on exchange to the USA. Because I knew my parents didn’t have the $10,000 I needed to study abroad for six months, I knew I had to change my spending and saving habits. I also knew that it was going to take me a while to get to my savings goal, because my entire income was three days a week at a bookstore and the odd babysitting gig.

So I set myself a budget. Most people think of budgets as impossible to adhere to or a waste of time, but they’re really not, if you make them manageable. So what are my tips for budgeting?

Write down your monthly non-negotiables. That is, you need to outline how much you pay in rent and bills each month – these are the very first things you have to pay off when you get paid. The rest of the money left over is what you have to budget with.

If you’re totally useless at paying off the non-negotiables first because you get distracted by shiny things (don’t we all?), then ask your work to pay into two different bank accounts. Most work places will do it for you. For instance, I know someone who has the amount required for her mortgage repayments paid into a separate account, so she never sees a cent and her house continues to be paid off, never a bill missed.

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I pay off all my non-negotiables first.

Now back to your leftovers. If you’re saving for something specific, write down the deadline for that item and work out how much you’d need to put away each paycheck to get there. Is it possible to save that amount in the time you have? If not, you may need to reconsider your deadline or look at other options – for instance, if you’re saving for a trip, you might need to look at flying a cheaper airline or staying in budget accommodation to make up for what you can’t save.

If you just want to save in general, then you can start a little smaller – I put away just shy of half my ‘leftover’ paycheck each month. (That is, half of whatever is left over after rent and bills).

After you’ve worked out how much you need to put aside each paycheck, look at what you’re left with. For me, it equates to about $250 a week. I can easily live on this and have a good time, although I don’t beat myself up about it if I have to dip into my savings once in a while – especially if I see a dress I must have!

Speaking of dresses, did you know layby is still a thing? Yup. I laybuyed (laybought?) a laptop just the other day. This way, I can pay it off over several weeks without a) ruining my savings goals or b) finding myself without any money for groceries. Who needs a credit card?

And on the topic of credit cards… pay those off the moment you get paid as well! If you’re paying interest on things, that certainly isn’t going to help your savings fund.

But back to my $250 weekly budget. How on earth do I live on $250? Actually… if I’m completely honest it’s closer to $200, but no one believes anyone who lives on $200 a week after rent and bills.

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Baking and cooking most things from scratch saves me hundreds of dollars a year.

I spend about $30-$50 on groceries, mostly from the farmers market and tend to bulk cook and freeze. I also split groceries with my housemate to keep costs down and avoid having to eat the same meal four nights in a row.

I’d spend another $50-$70 on meals out. Most of the time, these come in between $15 and $20 each, but if I know there’s a special restaurant I want to go to that will cost me more like $40 a head, that’s my only meal out that week. I rarely buy alcohol at dinner and if I do, it’s BYO.

So I’ve already spent about $100.

What about lunch? Well I explain how I manage free lunch here but if you’re not inclined to start your own sandwich business, then leftovers are a bargain option. Or take the idea of Club Sammich and cater for one: buy a roll, deli meat, cheese and a few veggies from the supermarket and toast your own using the sandwich press in the office kitchen. By bringing my own lunch Monday through Thursday, I can totally afford to splurge on a pub lunch on Friday.

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There’s still room for fun and treats – like my sneaky visit to Ottolenghi’s NOPI in London.

My last $150 goes to other things like public transport, visiting museums, going to the movies and other attractions, gifts and shopping. On the topic of shopping, yes I love it but I always think carefully about purchases – I like to put things on hold for an hour and come back if I’m still smitten… and if I know I have to buy a present, I put aside money in advance.

Yes, I still go out on Fridays and Saturdays but I take advantage of happy hours, avoid clubs with cover charges and don’t buy the most expensive cocktail on the menu… anyways, two drinks leaves me very tipsy.

I’m no stickler though and if I find myself at the end of the week having spent all my money and needing to dip into savings for whatever reason, I don’t punish myself. Instead, I think about where I could’ve saved and take note for next time. Because yes, I have found myself catching a bus when I totally could’ve walked.

I don’t think my budget will work for everyone – especially because I have the advantage of not needing a car because of my location, but it’s a good starting point and if you need more pointers on how to save, check out what I wrote here.

Are you saving for anything special? Do you have a budget or are you saving ad hoc?