Budgeting and tracking spending

Most people will roll their eyes just by the thought of those things. I used to be like that. I ALWAYS started a budget - have done so for the past 6 years but I never finished one and I never tracked my spending. It was just too hard. I used to have plenty of money so that spending didn't really bother me too much, but now I earn a fifth of what I used to earn and I NEED to budget and track expenses.

Last year, I started with tracking my spending as I knew this would help me to create my budget. In order to track EVERY expense, I bought myself a little pocket calendar. Personally, I try to work my budget to the tax year as it makes it easier to collate all of the relevant info for my accountant. But this is totally up to you. So, I bought a little pocket calendar smaller than my phone and carried it around everywhere. Each week, I added expenses from our bank accounts (e.g. direct debit etc.) before I summarised the expenses and highlighted any tax relevant ones. It was actually really really easy. I wondered why I never thought of this before. I always found it too hard to remember those little expenses where you pay a couple of $ for a cuppa – all those things you normally don’t get a receipt for. now I could write them down while I was waiting for my cuppa.

With one year of tracked expenses in a pocket book, I could transfer the information into a budget. I also saw where I spent too much money – in our case that was eating/drinking out and obviously, the travelling was pricey too. So, for 2017 I created a realistic budget and of course I’m tracking it as well. I only earn a fifth of what I used to earn, so it’s important that we have a plan on how I spend my hard-earned money.

Another thing I did, is calculate how much I actually earn an hour. Not just the 40 hours I’m actually at work but also the time to get to and from work, time to get ready to go to work etc. So, I work 40 hours a week, it takes me 20 mins one way to get there and another 20 minutes to get back. Then it takes me 20 mins to get ready to go to work plus my half hour lunch break and a weekly time allowance of 1 hour for work related laundry. For me, that works out to 51 hours a week – I haven’t included time for networking, training etc. I also haven’t included the cost (e.g. fuel, clothes etc.) to work. I wanted to keep it simple. 51 hours a week times 46 weeks a year (52 weeks minus leave and public holidays), that’s 2346 hours a year I’m occupied with work. If I then divide my income after tax with 2346, I have calculated how much I actually make an hour. Like I said it’s a simplified version but let’s say the result would be $25 and I want to spend $50 on shoes, I need to work for 2 hours to pay for them. If I want to go to one of our usual dinners which used to cost us about $120, I actually need to work for 4.8 hours – that’s half a work day just to pay for dinner! For me that put’s it into perspective.

But it’s not just about spending, we all need to save some money as well. A few days ago, a dear friend of mine has posted the link to the 52-week-money-saving-challenge. I have done this challenge in the past and thought it was great! You start with $1 in the first week, then save $2 in the 2nd week, $3 in the 3rd week and so on until you put aside $52 in week 52. You will save $1378 by the end of the year - a fair amount of money! Some people turn the amounts around so they start with $52 in week 1 and have to pay less at the end of the year when it's Christmas time and normally expenses go up. As I don't give expensive presents for Christmas, I will start with $1 and work myself up to the $52. As my friend who gave me my 'Sparschwein' posted the link, I will use the pig to save my money.

What sort of money bags or coin jars do you use to save?