One of the great things about having a regular income is that it has allowed me to start a decent budget for the first time in years. Before 2016 I was on contracts, a casual, constantly reapplying for my own job – all things which throw a spanner in the works of budgeting regularly.
At least it threw a spanner in the works for me. Maybe others cope with that stuff better than I do.
Like everything I write about finance, I’m not a qualified financial adviser. I’m writing about my personal experiences only. Due your due diligence, preferably with someone qualified who can look at your personal situation.
How I Budget In 2018
I have a multiple pronged approach to budgeting. Or multiple account approach? Basically, I like seeing things separately and I like having some things seperate for practical reasons.
My Main Bank Account
This is where I get paid my salary. When I get paid, I sit down and pay any bill that isn’t a direct debit from this account. For me, these are bills such as:
I PrePay Bills
I don’t wait for bills like electricity to come in to pay them. I BPay money onto them each pay period. I prefer it this way. The other way I’ve done it in the past is to put the money aside in a seperate account. I didn’t like that as much. Maybe it could earn a little interest if it was in the right bank account, but for me, right now, BPaying in advance makes me feel comfortable. And it’s also great when you get an electricity bill with either very little owing or in credit! Nice boost to financial morale.
Very very much a personal preference here. The other advantage I could see to putting the money aside in a bank account is having the cash on hand for an emergency; after all, you can usually negotiate payment plans for bills if an emergency has happened.
Some bills can’t be pre-paid. Things like car servicing or new tires are a bit hard to predict. I find these harder to put money away for, as I don’t want to put them in the direct debit account or have them throwing off how much I have in my emergency fund account. I have calculate the amounts that needs to be put aside for these bills each pay period, but I kind of wish they had their own bank account. For now they go into my emergency fund bank account (more on that below), but as a seperate transfer amount with it’s own note/description to differentiate it from my emergency fund. It basically means manually adding up what I have for occasional bills vs my emergency fund, but that’s how it is for now until I find a way I like better.
The Direct Debit Account
One of my bank accounts is set aside for any payment that is automatic. For me, this includes bills such as:
- Many insurances
- Personal loan repayment
- Car registration
I don’t like having a direct debit coming out of an account that is attached to a debit card/EFTPOS card of any kind. It makes me too cautious and concerned about if I’m spending money that I need to save.
It takes a while to set up a direct debit only account so that you’re funding the right bills at the right time. In doing this, takes some extra cash to pay current bills while putting money away for future bills, but now that I’ve got it set up, it seems to be working really smoothly.
Because I hate and don’t trust direct debits and have had them screw me over before, I usually throw an extra $10 per pay into that account. Just in case I’ve miscalculated anything. It’ll build to be a small buffer over time. Or I’ll stop doing it when I feel 90% confident that the timings work out. As I said, I don’t like direct debits, but it seems to be the way most people want you to pay.
In the past few months, when I was doing my big signing up for insurances, I took advantage of the “first month free” type of offers and still put the premium amount in the direct debit account. Seeing as I didn’t sign up for any insurance I couldn’t afford, it was an easy way of making a small buffer at someone else’s expense.
As you may have seen in this blog post, I have multiple ways I save. They’re small, but they make me feel comfortable. Apart from having my bills organised as above, I have three small savings.
- An emergency fund
- A travel fund
- An envelope system emergency fund
They’re all pretty straightforward.
The emergency fund is in at a seperate bank to my above bills/salary. I put a small amount, $10-20 per pay, into it. It won’t be the “ideal” 3-6 months of savings any time soon, but even $10-20 adds up at a decent enough rate. Anything is better than nothing, in my book.
The travel fund is similar to the emergency fund. It’s at a seperate bank, in a fee-free account. I fund it about $10 per pay. Again, I won’t be traveling overseas any time soon, but a start is a start.
My envelope system is my only emergency fund based on cash. After ANZ shut down my account just before Christmas and pay day in 2016 (and then were unhelpful assholes in fixing their mistake), a cash emergency system is essential to me. I have envelopes for:
- Vala’s medication (goal $90)
- Appliance breakdown (goal $300)
- Medical eg prescription (goal $20)
- Food (goal $50)
- Fuel/transport (goal $30)
I fund these irregularly, as it’s irregular that I have coins. I fund them only in gold coins, as anything smaller is too heavy for envelops and too annoying to count. $2 coins go in the envelopes with “big” amounts and $1 coins go in the envelops with “small” amounts.
I feel like I say this a lot in any post about money, but so, so much of this is personal preference and comfort levels. What I do may not work for you. Maybe one part of it will work for you. Or all of it. Or none of it.
How do you budget? Do you like different accounts/places to keep thing like I do or are you an “all in one pot” kind of person?
20 Replies to “How I Budget In 2018”
I really need to sit with Hubby again this year and work out a budget. I start one and then get too busy and forget all about it.
Yep I think I’ve been there before!
My husband hates budgets. I tried with him 20+ years ago and we tracked all spending for a month. He hated it and proved to me over time that we are pretty consistent with our spending (and not big spenders on extras anyway). So as long as we discuss big purchases and balance out things (like one month might be him buying concert tickets and another month I buy art supplies etc rather than everything in the same month) all is well. If I had it my way we would cut back some spending (like beer and wine lol) and save more but he is a firm believer in living well while living within our means.
I don’t sit down with excel or anything like that. That’s not my style. Too rigid! But it sounds like your system works for you and that’s the most important part really.
I hear ya. It can be hard to budget when you don’t have a set income each week because of contract or temporary work. Thankfully my husband’s wage is constant and what I earn tops what we need. This post reminds me we need to reassess two things on our budget for this year.
Yes, those years of contract work I did rarely meant good budgeting. Too unreliable. I’m mentally restless in a permanent job already but it is doing wonders for financial stability and future planning.
My budgeting strategies (and spending habits) will have to change once I become redundant next month.
Oh that will be a change indeed. Good luck with it.
I’m a couple of chapters into The Barefoot Investor and am really looking forward to implementing some of his tips. Some of my budgeting is similar to you in that I have direct debits set up for bills. I also have separate bank accounts – every day where we get paid and pay bills from, savings account, school fee account, mortgage account and car account. I really hate doing our finances, it’s one of my least favourite thing to do!
It’s so much easier to know what you have with different accounts but then when you have too many it’s also a bit much. Hard to find that balance.
This was an excellent read. You are doing very well. I have a ‘head in the sand’ approach to our finances yet I need to be far more involved. When I was earning and my hub wasn’t well I had more control of what was going here and there. In fact we did pre-payments too. Since retiring and having a fixed income I know our outgoings (because Hub does a ledger of what is going out/coming in) but since starting to spend on clothes (yikes!) that area has risen significantly even though I source at the sale prices. I am just about over it all now and have settled into a stay within my limits approach. Surgery out of pockets till need to be accounted for and my health (and hubs) is one area which is unknown so I like that we have back up for that. Denyse #teamIBOT
Yes, planning for health is a huge unpredictable thing. That was one of the main factors in me getting trauma insurance; if something serous happened to me we have fast (well, for insurance haha) access to cash to cover expenses, both regular and medical. I hope I never need it but I am happy to know it’s there.
I’m only relief teaching right now so it’s hard to budget because I don’t know what I’m going to earn. Luckily hubby’s wage packet is regular and enough for us to live on. That said, I’d like to be better informed about where we’re spending our money. I’ve got The Barefoot Investor on my to-read list!
Sooo many people have talked about that book recently that I decided to bump up my blog post on why I don’t want to read it haha.
Good that you can live on hubby’s wage. We can live on mine but I’d like more money so I can pay off debt (I don’t have much in a national average kind of way but I’d rather have none) and maybe save for a house. Not sure how to save for a house on one income, that’s for sure.
I must admit this is not my strong point. I don’t even know what day pay day is. Or how to log into my internet banking. I leave that aspect of adulting to my husband.
The worst thing about online banking is remembering the passwords if you don’t use it often!
I think our systems are very similar. I have one account that is simply for bills & direct debits too and it makes it so much easier. I work out everything over a 12-month period and then split it up by 52 as Dave gets paid weekly and then each week a set amount goes into that bill account. Some months there will be extra in there which then provides a really good buffer when something unexpected comes along and I can borrow money from there, still knowing that all the important bills are covered.
It’s a nice way to know things are covered.
I really need to get better at budgeting. I do have an envelope system and also just opened another account to put in about $10 a week to save. I do have separate accounts from where my bills come out of and one which I rarely touch but most of my pay goes into.
There are a few things I’m always caught out by like PO box bill, because it’s only annual I forget about it. But over time I’m getting better at the rare/adhoc bills.