5 Tips for Managing Your Personal Finances and Keeping your Self Sane in the Process

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In my meandering towards becoming a kick ass philanthropist I have learnt a few techniques that have served me well.  I am obviously only qualified by experience in this, so please do consider speaking to a professional if you have particular questions about your personal circumstances.  What lies below, however, are 5 Top Tips that you may find useful:

1.) Track your Expenditure

Sounds basic but there is absolutely no way to manage your expenditure unless you know EXACTLY how much you have coming in, how much you have going out and what is going where.  If the idea of drawing up a budget has you running for bed/counselling/a G&T, start by first looking at where your money is going.  I’ve found two things super useful in doing this

Receipt Tracking – I went through a period of keeping receipts for everything.  It did mean that my hitherto slim and slender card wallet looked a little bulbous but it did, in the long term, prove invaluable.  I would collect all my receipts at the end of the day and input them into a spreadsheet against specific categories.  At the end of the month then I could crack open this spreadsheet, do my self a nice little pie chart and see where all the money was going.  It really is a tedious exercise at first, then often a little painful to see where you are hemorrhaging money but getting a cold hard look at where you’re at is Step #1 in getting your self to Financial Freedom.

Expense Tracking Software – There are a lot of apps out there that allow you to either automatically track spending (via a link to your bank account) or give you a snazzy interface that allows you to manually input your expenditure as it happens.  My personal favourite (and its free) is pocketbook.  You can check out the desktop version here. Equally you may be able to do the exact  same thing via your online banking – CBA allows me to track my spending by neatly categorizing it for me.  This is super helpful if you want to see where you are in a ‘live feed’ – not to mention helping you reign in those Trigger-Happy-Buy-Now-Button-Clicking-Wallet-Trampling-Wild Stallions that sometimes are to blame for flinging us hurtling us towards the bread line (aka 3 Square Meals of Boil in the Bag Udon Noodles from here to payday). 

2.)  Use a Budget. Seriously.

Having a personal budget is fundamental.  The idea of it was pretty intimidating to me at first but it has been the key reference point in ensuring that I am going to make progress towards my goals but also to avoid awkward moments at the cashpoint.  I have attached an example of a budget (thanks Alex Niblett!) – there are a few terms there that help me delineate my outgoings in such a way that stops me making a serious Boo-Boo, as it were. Kudos for managing my money this way goes to David Schaeffer and the gang at Balanced Wealth Creation (check them out!). So those terms are:

 

Fixed Known Bills – These are regular outgoings that are fixed in terms of cost and in terms of frequency.  Having these separated allows me pre-allocate funds and, as I mention in point 1 pay those straight after I pay my self.

Variable Day to Day – These are outgoings that vary both in terms of cost and frequency i.e. standard living life expenses like food, your mobile bill and, importantly shaking your tail feather how you wanna (aka fun).

Variable Accrual – These are outgoings that may vary in amount and time but for which you need to allocate funds on a month by month basis i.e. debt repayments, savings (if you pay different amounts per month), annual car service fees.

My budget is super basic, tailored to how I like it but the important thing is to take this, adapt it needs be and make it work for you.  I would also strongly reccomend checking out check out the personal finance wizardry coming out of the appropriately named ‘Budgets are Sexy’ for great templates, not to mention a bank of hard earned wisdom.

I won’t insult your intelligence by labouring this point but ultimately having all your incomings and outgoings outlined in one document will show you immediately where the ‘holes’ may be, not to mention a potential road map to get closer to your finance goals.

3.) Pay All Bills on Pay Day

Ever had the drop in your stomach as you close one eye and open up your banking app to see how much dollar is left to get you through til Payday?  Worse still, liming up for the ATM praying like an Old Testament Holy Warrior that you wont be shamed into walking away empty handed bar a docket that says ‘Insufficent Funds?’.  I have, multiple times.  One key way to avoid this is to pay all bills at pay day.

I’d recommend setting up a Direct Debit for the day after payday (just in case there is a delay). For some people this may be a challenge as you get paid fortnightly and the bill comes monthly: in which case always allocated the proportional amount for that bill to a separate account or cash envelope.  You HAVE to consider that money already spent at the point of income so as to avoid accidentally spending it.

4.)  What are your none-negotiables?  Or, How hard do you want to go?

When talking about getting your self out of debt Dave Ramsey champions the philosophy of hurtling towards your goal with ‘gazelle-like intensity’, taken from the biblical Proverb which says, “Give no sleep to your eyes, nor slumber to your eyelids. Deliver yourself like a gazelle from the hand of the hunter, and like a bird from the hand of the fowler.”  I.e. Do not go it half-heartedly, make it a laser like, singular focus.  The sooner you do, the sooner you have that noose from around your neck.  

That said, while the road to Financial Freedom is doubtless not without its sacrifices, it’s important to remember that it’s very hard to completely compartmentalise your life (or put it on hold) while you sort out your money worries.  Most humans have partners, families and/or emotional needs that need to be met, sometimes with a price-tag attached.  I really cut back on my social spending initially, purchase of clothes and other fun funds which was grim at times but was the price I was willing to pay to get my life in order, sooner rather than later.  I soon came to realise that all work/budgeting and no play makes Rhysy a very dull boy (read: dull as a beige rainbow and as entertained as a recipient of Chinese water torture or a TV set stuck on Infomercials).  It was then that I slackened my fun budget to allow for a ‘few’ more dinners out and gave my self a slightly more expensive than average gym membership.  Why?  Because hating where you’re at can sometimes be so burdensome that you throw the baby out with the bathwater.  I’d love to be out of debt tomorrow but I also want to enjoy my life enough to keep that momentum going.  Know what you are willing to sacrifice and where you will allow your self to recharge your batteries.  Self-Investment is important and will reap dividends in the long run.  

4.)  Be Flexible – Personal Finance is, by its very nature, TOTES EMOSH

No matter how gung-ho you are in terms of your Personal Finance efforts you are unfortunately not a Cyborg being that lives a very controlled existence, devoid of predisposition to mood swings, life challenges and relational hiccups.  Money is Emotional!  We impulse buy as a comfort, we sometimes sell stuff out of fear, we lend, out of love, to our nearest and dearest.  Your current financial situation has been arrived at through planning (or lack thereof) but also through a series of emotional decisions based on your goals, experiences and the age old pendulum of life.  This means that in you looking to change this, it will also bring various emotions to the surface – the whole journey can’t be conditionally formatted onto a spreadsheet.  Much as I would like that.  You will have victories, you will also have failures that take you backwards but the important thing is that you are learning.  I’d keep a journal (or blog like yours truly) to remind your self where you are going and what you have been through.  Also, share the message with your nearest and dearest – they are likely to be the first to cop it when things get hard but also, if you are anything like me, you’ll need their support along the journey.

You WILL get there but when the journey forward feels more like a cha-cha slide, go easy on your self, know that that is normal, learn then move on.

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I hope the above have helped! I have unshakable belief that you are able to get to where you need to go with the right mindset, some learnt skills and getting some cheerleaders around you to keep you going.  Go Get It!

Do you do anything similar already?  Would love to hear your thoughts!

Here is your shiny little sample-budget

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