Right, hands up, who’s out there living to a budget and LOVING IT…? *Cue tumbleweed and awkward cough from the back of the room*!!
I hear ya! Until last summer, a budget for me was non-existent, not in my reach and something only people with huge salaries and no life participated in! They sounded boring, restrictive and put my anxiety at level 100 thinking I’d need to look at my (usually overdrawn) bank account on a regular basis!
You see, since the age of 18, I’ve been in debt. As soon as I turned 18, I got a credit card. I legit had NO idea how it really worked but what I did know was I had something like £1750 at my immediate disposal and a desire to go out in Romford most nights of the week! So, I did what any naive 18 year old with severe FOMO would do and would put most of my nights out, shopping sprees and even my fags (when I used to smoke!) on the credit card. Ugh – it hurts me just thinking about how much damage I did to my financial self back then and didn’t even know I was doing it.
Anyways, I later went on to get loans, store cards and more credit cards; balance transferring but never clearing any of them. These shenanigans went on until I was 25 and bought my flat (I’ll write about my experience with house buying solo in another post!); a condition of my mortgage was to clear all outstanding debt before completion. My Mum stepped in at this point and using some of my late Grandads inheritance, cleared all of my debts for me! Amazing – I think I managed to stay debt-free for about 3 years and then the cycle started again.
A few years later, I remortgaged my flat and cleared the debt I’d incurred this time round (by this point it had got to around £25K including my car finance) and within 2 months, I was overdrawn again.
I mean, what the actual hell?!! HOW is that even possible? It was at this point I realised I had a genuine issue and had also been doing a lot of personal development and mindset work. Twice I’d cleared my debt and got back into tens of thousands of pounds of it again with barely anything to show for it. I got really honest with myself and decided to seek help in the form of a Money Coach. I worked with Catherine Morgan at The Money Panel and through her course, she helped me to identify what caused me to spend, where my fear around money came from and improve my money mindset to have a healthier relationship with money, saving and also spending.
One of the things she had me do, was an exercise which I now do monthly to stay on track, stay accountable and give me better clarity on where my money is going and how I can improve and change my spending and saving.
These steps have now helped me to create my monthly budget. Yep, your girl here is a now a major budgeter!!! What I love about this budget is that I still allocate myself money for socialising and treats – boujee right. You see, you don’t have to sacrifice a life to budget. For me, it’s simply a way to ensure you’re aligning your money to the relevant parts of your life to suit your lifestyle and your finances. I personally don’t believe in the one size fits all type of budgets. Also, I have an ever-changing income as I work in Sales so my commission changes every month (as does how much I get taxed but that’s a whole different story!!) and so I like to amend my budget to reflect that and what’s happening each month.
These are the steps I take on a monthly basis on payday weekend to create my Boujee Budget (please note: I’ve amended this exercise ever so slightly to help me achieve my goals and create consistency).
Step 1: Review the previous month’s outgoings
This is quicker and easier than it may seem. For me, I print off the statements for both of my bank accounts. I have a Starling account which my salary is paid in to and my bills come out of, and a Monzo account which all of my budgeted money goes in to and I use for spending.
I have a spreadsheet created with tabs for each month of the year, with various headings (mine are: Bills, Food, Transport, Socialising, Treatments, Shopping, Subscriptions & Other.) You can have whichever headings feel relevant to your outgoings.
I go through my statement line by line, and put each spend (what it is and the exact amount) under it’s relevant heading (meal out with friends would go under socialising, petrol would go under transport, grabbing lunch from M&S would go under food, payment towards a holiday would go under other etc.). For me to do my entire months spending review from both accounts usually takes about 30-40 mins and that’s usually with a glass of wine and watching TV at the same time!
Once everything is listed, I add each column up to see what the total spend is in that area, and then the total spends for that month.
These figures then help me to create the budget.
Step 2: Allocate your finances
Once I’ve got all of my figures, I look back at the last 3 months spending in each area, and this helps me to understand
- Where I may be overspending
- Where reductions can be made
- Where I may be underspending!
Yes, it’s completely possible to underspend! I actually don’t spend enough on socialising, and I spend WAY too much on food. So I’ve started meal planning to stop wasting so much money on top-up shops and takeaways, and be able to spend more money catching up with friends and doing things I enjoy without having to whack it on the credit card!
I then distribute my money across spending pots. As I mentioned earlier, I do my day to day spending on my Monzo account and ensure there’s enough money in my Starling account to cover my bills. The way I’ve found best to work for me to manage my money/budget is to use the ‘Pots’ function to give each part of my budget its own little home! My Pots are very similar to the headings on my spreadsheet: Food, Transport, Social Life, Everyday spends and Treatments.
I keep £100 in the main account as a ‘float’ so I can spend first and move the money later. Then, using the average of my 3 months spending, I put the relevant amount into the Pot. Each time I spend, I use my Monzo card, then when I get a moment, will go into my account, move the money from the relevant Pot back into the main account and bring that back up to £100.
And that’s it! Review and Allocate! It takes me less than an hour a month but has stopped me from living in my overdraft (I was £700-1000 overdrawn every month before I started doing this!)! I spend a lot more mindfully now and have a much better understanding of where my money actually goes! I no longer feel guilty for spending like I used to and am soon to be in a position to start paying down the remaining debt I have and work from a more static budget.
At the moment, I’m not allocating a specific amount to savings and nor am I allocating money each month to my debts as I want to get a clear understanding of how much I’ll have leftover each month as a minimum and also because I’ve never actually been able to enjoy my money, I’m taking a few months to just find my rhythm and take the pressure off!
I’ve been using this method since December 2019 and to not even have touched my overdraft in that time is a monumental achievement for me, and is progress in the right direction! As we’re currently in Lockdown, the money I’ve saved from not having my treatments done, not parking at the station and not having a cleaner in weekly, has gone into savings to get some work done around my flat I’ve been putting off for years (dishwasher is that you..?!). I’m still spending and budgeting in the same way though to stay on track and it’s definitely helping!
So that’s it – how to create a Boujee Budget which includes prosecco, ASOS hauls and spa days with friends!
If you want any more insight into this, leave a comment below, pop me a message or DM me on the gram!
Happy Budgeting Guys ✌!