So today I want to about why having a budget is important and for me vital now that I’m 55.
I didn’t know that focusing on saving money would have so many benefits in all aspects of my life.
I’ve just answered the door to another person who responded to my freecycle offer of craft materials. My mum passed away 5 years ago and I inherited lots and lots of her craft materials. At the time I thought QVC must have suffered a decline in business.
I don’t know why but it has taken me that long to release that stuff. At first I was going to sell it.
I got ill. I was struck with viral meningitis 3 times in a 2 year period following her death. I was left with ongoing severe fatigue.
Working full time I just didn't seem to have the energy or inclination.
Since my ex moved out back in February I’ve been heavy duty decluttering. I was struck with viral meningitis yet again a couple of months ago so I’ve had to take things much slower.
So what has this got to do with budgeting?
I don’t know really but I’m feeling good about giving stuff away and helping people.
For the first time I understand what a budget is and I’m feeling good about using budgeting to take control of my finances going forward.
I've started to implement strategies to help me save money. I shared one of them a couple of days ago when I wrote about getting an NUS student discount card even if you're not a student.
Now at the grand age of 55 you’d think I would understand what a budget is. I’m educated - well I like to think so. I have a degree and a number of diplomas. Maths was one of my strongest subjects at school too. But somehow when it came to personal finances I’ve made some mega mistakes.
Now I’m not going to talk about those mistakes here but I’m sure I’ll share some of them in future blog posts.
So what is it about a budget that is so unsexy?
Firstly let’s look at what a budget actually is.
I thought I knew what a budget was.
I’m sure over the years I’ve sat down and done a budget …
Well if I haven’t what was I doing?
Well from what I’ve learned recently I can definitely say that what I thought was a budget was far from being that.
I would write out some figures on a spreadsheet. I do love a spreadsheet.
I would allocate monies to categories.
Well that sounds about right doesn’t it?
The thing is that is all I did.
I’d create it and then carry on …
I can’t remember actually going back to look at my budget to see if I’d kept to it.
Oh wait a second.
I remember now that I’ve also downloaded budget apps on my phone.
I think I even input information for a couple of months or so but I don’t think I really understood it.
It was listening to Dave Ramsey saying that every penny needs to have a job that the penny started to drop.
So anyway I love research so I searched “personal finance budget definition”
I like to be precise. Well I needed to add personal otherwise I kept getting business budgets.
I found this definition on selfgrowth.com
“A personal budget is a finance plan that allocate future personal income towards expenses, savings and debt repayment. Past spending and personal debt are considered when creating a personal budget.”
As I said I started focusing seriously on my personal finances after my relationship of over 20 years ended. Nearing 55 I found myself worrying about whether I’d have enough money in retirement now that I was single.
I started doing a lot of research. I read blogs, watched videos and listened to podcasts about personal finances. I realised there was so much I did not know. Most importantly though I was reassured that it wasn’t too late to start making positive changes.
I completed a 30 day money journalling challenge in February/March. I’ll share with you what I learned going through that process. One of the things I did realise though was I needed a budget.
It’s really interesting how we automatically repeat old patterns.
I spent hours creating a budget. I looked for templates. I went through my bank statements and recorded the figures …
But guess what?
Yes I was spending less …
But you know what?
I still wasn’t following the budget.
So let me do a quick search “Dave Ramsey Budget”
I decide to click on “How to make a monthly budget that works | Dave Ramsey”
Ah yes …
This is what I’m looking for.
I wanted to get the wording right.
“Doing a budget is simply telling your money where to go”
I’m going to repeat that because I need to hear this again too.
“Doing a budget is simply telling your money where to go”
It really has taken me the last 5 or so months to really get this. Listening daily to Dave Ramsey’s podcasts and other people in the personal finance arena.
Dave promotes his “Everydollar app” which is a free budgeting tool.
I couldn’t find it in the app store on my phone and found what I thought was an alternative and even paid for it before I realised it didn’t do what everydollar did.
So as I do …
I googled “everydollar uk” and found out that it is only available in the US and Canada. I then found out that I could use it on my pc and I was able to create an account by entering Canada.
It was using Everydollar for the first time that I fully understood the concept of giving every pound, because I’m in the UK, a job.
It is a 4 step process and I’d always been able to get steps 1 and 2 right. I was getting to grips with step 4 but it was step 3 that I didn’t really understand until now.
Here are the steps:
Step 1: Write down your total income. This is all income after tax whereever it comes from.
Step 2: List your expenses. So your regular and irregular bills. I’ve tripped up in the past because I’ve not accounted accurately for those irregular bills and have been caught out when a quarterly or six monthly bill is suddenly taken from my account.
Step 3: Subtract expenses from income to zero. The key here is that it should total zero so that every pound is accounted for in your budget.
Step 4: Track your spending. I just didn’t do this in the past. Since doing my 30 day money journalling challenge and reading Your Money Or Your Life by Vicki Robin I’ve been tracking my spending daily.
The other very important mistake I made in the past …
Wait a moment. Something I got from Vicki Robin …
“No shame no blame”
I say that now anytime I think about mistakes I’ve made in the past and start to have feelings of regret. What is done is done. I’m learning new skills now which will only make things better for me and my family in the future.
So as I was saying. The other important mistake I made was not doing a new budget each month.
For some reason I thought I just needed to do a budget once and it would last the next few years.
How very wrong I was.
Every month is different.
I now love the idea of planning my budget for the next month based on what I know is going to be happening in my life.
Budgeting has suddenly got very sexy.
Here are some tools I’m using to track my spending.
Small notebook. I date each page and write money in and money out. Very simple. I have so many notebooks it didn’t cost me anything to get this started. It is a good idea to keep the notebook close. The best place I find is by my bed so that I can write in what I’ve spent that day. If I move it then I forget.
Meetcleo messenger app. This is a tracking app that is linked to my bank account. It sends me daily updates via Facebook messenger. I’ve been using it for several months now. I can ask it what bills have been paid and what bills are outstanding. It has a budgeting feature but I don’t think it is that accurate. However, I love how easy it is to access information on my spending and a breakdown. I was able to ask how much I’d spend on groceries over a particular time period. Doing this manually is time consuming.
Easy Money Planner. I paid £4.80 for this spreadsheet which allows me to record my spending and it calculates monthly debit and credit. I get to see at a glance my overall spend for the month and whether I’ll have a positive or negative figure. I’ve loved using this alongside my notebook. It gives me a daily balance figure. I’ve set it up so that I have a column for groceries and a separate column for bills. I’m working on reducing my grocery spend and this has been very helpful.
For me the purpose of having a budget and following it is so that I secure a financially comfortable future for myself. I want choices as I move into the latter stages of my life.
I’m following Dave Ramsey’s 7 Baby Steps. I’m on baby step number 2 right now.
Actually to be honest I'm following his steps but I have tweaked them slightly.
I follow T Harv Ekers 6 jar money saving system. That means I'm not throwing all my spare money towards my debts which he teaches for step 2.
It is still working for me though.
I’m recently separated so it is even more important that I’m financially savvy and healthy as I move into and through the dissolution process to bring that relationship to a complete end.
I'd love to know your experience of budgeting or not...
The Freedom At 55 Project is my journey to become more money savvy following the breakup of my relationship in my 55th year. I share what I learn about saving money, retirement planning, pensions and living a simpler life. I want you to know there is hope. It starts with reconnecting with your true self and deciding to take charge of your life.