Ever asked yourself this exact question?
Well this post is going to turn your broke ass around, so sit down because I’m going to rant about something really sexy and popular: Budgeting.
As i said in my previous post, keeping track of your expenses is vital for financial health.
Do i practice what i preach? Well off course!
I’m a HUGE believer in keeping tabs on your expenses, And what better feeling to have than to see that you just saved about 50% of your income that month?
Money is a curious commodity. It makes us do weird things and it influences us more than we’d like to admit. We don’t want to part with our hard-earned cash so badly it’s even hardwired in our brains. Still you end up broke every month. Why? Where did it all go?
Well to illustrate that I’m going to tell you a little story about a man two years ago that just started working a full-time job: Yours truly.
You can laugh, but I was there every month: broke and living on ramen noodles the week before my next pay-check. I worked in a bank talking about being responsible with money and iIwas the most irresponsible person when it came to my own finances.
I had NO CLUE where my money was going, really. I fucking spent like there was no tomorrow. New glasses? -Heck yeah! Hey my washing machine makes weird sounds? -Throw it out and buy a new one!
I was a perfect example of how media expects our generation to be; Consumerists.
I threw my hard earned cash away on stuff.
Did I need that stuff? Well maybe or maybe not, but for sure it didn’t make me happier.
One night, my bankaccount went below zero. I was in debt for the first time in my life and it didn’t even start yet! It was my wake up call.
That night i started listing up all my expenses of the last six months, the result?
More than 10 000 euro gone. (12 000 in Freedom Units for my American readers)
I was disgusted with myself, where did it all go? I could’ve done so much with that amount of money!
So here’s the list and the expenses on it, or as i like to call it; My money destinations:
- Housing – 450 euro
- Utilities + TV – 150 euro
- Food – 600 euro
- Clothing – 200 euro
- Magazine Subscriptions – 25 euro
- Fitness – 20 euro
- Healthcare – 10 euro
- Going out/Other – 150 euro
Not so bad actually eh? Not in relative numbers no.
Let’s look at it in percentages; My top 3 then looks like this:
- Housing – 28%
- Utilities + TV – 10%
- Food – 37%
Right there, i spent about 75% of my total income.
Well, for me it meant ALL MY MONEY OUT THE DOOR.
My money went everywhere and refused to stay inside my pockets.
Starting the Budgetgame
I knew i had to turn this around, this was a downright unhealthy situation. I couldn’t afford anything because there was never any money left at the end of every month. Let alone the stress I experienced because of that!
So, insert a budget.
I started looking at every expense; Do I need it? Do I want it? Can I live without it?
Fast forward a few months: I cancelled my TV subscription (never used it because I was always working), I cancelled my magazine subscriptions, stopped shopping, looked at cheaper stores to shop for food (hellooooo Aldi!) and much more.
All of a sudden i was able to start saving for the first time in over a year!
What an awesome feeling!
But tracking your expenses is hard work, at least for us Europeans out there.
There are no really awesome budget apps out there like Mint that you can link to your bankaccount so i did (and still do) it all myself in Excel.
This way you get your own life’s financial data, how awesome is that??
Start now, don’t wait ’till next week
If you don’t start now, you will never. Next week is an excuse you make to yourself to stop taking responsibility. I had my wake up call, now t’s time for you to have yours.
Even if it’s just on a piece of paper: Start. That. Budget. Going.
It’ll work wonders and gives insight where you don’t have any right now or are just guessing away. How much do you owe on that loan? Can you get a better percentage? Start calling your provider, what can they do for you? The options are endless.
Once you know where your money is going you can start figuring out if it’s all really worth it.
Using a budget gives you a head-start, YOU know where YOUR money is going.
Unless any unforeseen event happens, you know how your month’s going to unfold money-wise. How’s that for some mental peace?