Tips for Budgeting SMART!

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First Rule About Budgeting - Make a Budget!!

It doesn’t have to be a big elaborate spreadsheet with formulas and colour coded tabs – it can be as simple as using Revolut for your everyday spend (coffee, lunch, petrol) and paying the mortgage / rent / bills etc from your bank account – find what’s right for you and stick to it!!

Money is just the means to get there -set your goals first, then make the budget fit!

Don’t let budgeting be a chore or just about getting ruthless and cutting out all the fun things – remember you’re doing it for a reason. Its about planning your ‘needs & wants’. Ultimately, a good budget will mean you’re balancing your income and expenses and adopting good financial habits that will benefit you into the future.

It’s all about balance! Have the right structures in the background to arrive at your future financial goals and not be surprised by the costs associated – but make sure you’ve put aside a bit to live a little as well, its just as important!!

There’s a million different ‘Rules of Thumb’ when it comes to making a budget but here’s some of my top tips to make sure you’re budgeting SMART:

Specific – Remember, it’s YOUR budget!!:

First things first - write down and have a running total on your ‘essentials’ (Rent, Groceries, Utilities etc) - these are your ‘needs’ (non negotiables). Then be sure to save a little for future you. Whether its building your emergency fund or planning a deposit, think like Jack Geller from Friends and build that financial safety net!! ‘“10% of your pay check, where does it go? In the bank!”  Try to use Jack’s advise as a minimum and target 15% - 20% to save for future you!

Then, it’s the ‘wants’. These are somewhat restricted at the minute but make sure you’ve got your essentials and safety net covered before factoring in those wants! Keep them specific and this is where you can afford to be a little more ruthless. Check those monthly subscriptions and if its collecting dust, direct that amount towards something more purposeful (a new hobby, new interest, learning something new….. or save it!)

Measurable – Calculator at the ready!!:

Be sure to track your progress and keep your budget as measurable as possible. Whether it’s the latest budgeting app or the old-fashioned pen and paper, make sure you’re planning with a purpose and keep on top of things with regular check ins. You’d be surprised by the positive impact that reaching budgeting milestones will have on your relationship with money. If things start to slip, don’t panic, it’s a lot easier to get back on track if you review things regularly.

Achievable – Think positive, it’s a marathon not a sprint!:

Remember why you’re budgeting and keep that in mind if you start to notice those good habits start to slip. One key aspect of a good budget is the ability to achieve it. Try not to think ‘imagine if’, think ‘when’… when I reach my savings goal, when I move into my new place, when I get debt free etc.

At the risk of sounding a bit cliché, its not about keeping up with the Jones’s. Consider your goals and be realistic when setting them. I don’t expect to wake up in the morning and win the Men’s 100M Sprint (especially after my generous lockdown) - so why should it be any different with my budgeting goals!

Realistic – Be Realistic -Don’t Cheat with the figures!:

Seems like a bit of a given, but don’t spend more than you earn! This is where we would see the majority of budgets put to the test. Its vital to be honest and realistic when you are drafting the budget – it’s the only way that you’ll be able to stick to it. Be honest with the expenses and round those figures up to be safe… no cheating, Jack is watching!!

Timeframe – Set yourself some Budgeting Milestones:

Set yourself milestones throughout your budget and reward yourself when you smash them! For example, if you’re budgeting to save €10,000 by the end of 2022, then set yourself some milestones to focus on along the way. For example, after you’ve saved €1,000, then set your sights on €2,500, then €5,000 and so on….. Make sure to reward yourself with some of those ‘wants’ when you nail each milestone!

What’s Next?

For anyone looking to take a look at a quick and simple way to start your budget, here’s a handy budgeting tool from the CCPC

https://www.ccpc.ie/consumers/money-tools/budget-planner/

Final thoughts on budgeting....... be consistent but don’t beat yourself up – no one has a crystal ball and it takes time to build those good financial habits so stick to the plan and make sure you reward yourself for hitting those mini milestones!!

Niall