The Fifth Budget of the Year in Review

As we begin the month of June, it’s time to share the fifth budget of the year in review. The idea behind this series is to share how I plan as well as review my budget. The aim is to remind people to plan their own budgets and to teach those not sold on budgeting another way to do it. I have been budgeting all my life but that doesn’t mean I have always been good at it, you just need to look at how I blew my April budget and know that even though I do it regularly, I still make mistakes with my budgets in the sense that I spent what wasn’t budgeted but never go into debt as I only spend money that I have.

One thing I have learned over the last few years of budgeting and more so over the last 12 months is that we need to focus on making money work hard for us and not the other way round. We live in a consumer centric world which in itself is not totally bad, it is just that we spend money on unnecessary things that are liabilities but we mistake them for assets. Financial literacy is not taught in schools and I hope on this small blog and YouTube channel, I will be able to inspire someone to educate themselves on managing their finances better. This is my hope as I share the fifth budget of the year in review, I hope that it inspires you to start budgeting.

Disclaimer: I am not a financial advisor, seek professional finance advise for your particular needs.

The Fifth Budget of the Year in Review

When it comes to budgeting, I follow what is known as a zero-based budget which simply means that my income minus my expenses equals zero. This is not to say I spend all my money but rather my money has a job i.e. savings, bills, miscellaneous spending and so on. The budgeting rule I use is called 50-30-20 rule whereby 50% of my income is allocated towards my needs (housing, food etc), 30% towards my wants (Netflix, holidays) and 20% towards my savings or debt for those who have it. I also follow a budgeting style that incorporates digital sinking funds with cash envelopes for budget categories that I need more control over like Food and home.

This may seem like a lot of budget styles to follow but honestly it isn’t, the 50-30-20 rule helps me understand how much I should spend in each category. For example, I know I should only spend about £2300 in my fixed expenses, about £1100 in my variable spending and about £800 going towards saving. Often I switch my variable spending amount with my savings goal which is always good since you want to save/invest more than spend. The zero based budget just means I give every single cent of my money a job to do even when I am splurging, its all accounted for in the budget. For cash envelopes vs digital sinking funds, this is a savings strategy that I use.

So, let’s get into the fifth budget of the year in review where I share how I did, you can watch the full video on my YouTube channel. The trackers that I use in my everyday life and share in the videos on my channel are those that you can purchase from my Etsy Shop. So for the month of May, I spent £6500 for a garden renovation, this is money I have saved up since the beginning of the year specifically for this purpose. I had a personal emergency that cost over £1500 then spent almost £600 on a surveyor for my rental property which was an unexpected cost. I am glad I was able to make over £500 from this blog which helped with all the unexpected expenses that I had.

All in all, the month of May was an expensive month but thankfully I didn’t need to go into debt to cover any of the big expenses I had. I am glad that I spent the time to save the money I needed for big projects like doing up my garden. Other unexpected items that came up required me to use my savings or run them through the budget without much effort. I live by the principle, if you don’t have it don’t spend it especially when it comes to spending money on liabilities (new phone, new car etc). I am someone who loves to splurge on things that I love but only when I know I can afford it and don’t need to take it on credit and pay it back in instalments as this is how people get into debt.

Other Money Posts You May Have Missed

• Top Finance Books I love and Recommend – this is just a list of few books that I have read either recently or so far in my financial journey.
• Practical budgeting tips for beginners – if you are new to budgeting, this post would be really helpful.
• 5 things I now splurge on since becoming debt-free – the items I mention are not what every things, well maybe the travel but everything else is not what people were thinking.
• FTSE 100 Joy – this was a guest sponsored post on how the vaccine rollout is giving back home to the stock market.

I hope this post inspires you to look over your own budget and plan for the new month. Every single day I sit down, write all my expenses for that day (even though my EMMA app does this) including the standard expenses, I give myself spending targets for each week especially for categories like food which seem to be the hardest to control and I monitor my spending. I write my financial goals monthly and review them weekly to see how I am progressing and also I make changes accordingly to support the goals I am trying to achieve. Have you done your budget review yet? How do you budget, do you use trackers, apps or paper?