Spending money is fun, but it can sometimes leave behind an empty feeling in the pit of your stomach as you wonder: should I have bought that $200 fedora? You can keep those kinds of cravings in check by setting up a budget (and sticking to it). Here are a few tips we'd like to give you.

Why budget?

The power and freedom to buy things is great, but the responsibility to keep tabs on your spending and make sure you can still pay for rent, bills, and food is also great. Keeping your receipts is one way of doing it, but creating a budget is much easier. Having your all expenses listed in one place can help you:

  • reflect on how you are spending your money and take action if needed (really, a fedora?)
  • work out how much money you need to survive from week to week and plan those in (pro tip: plan it in for several weeks in advance to avoid unpleasant surprises)
  • control your costs
  • save money

Starting a budget

There are several ways in which you can start a budget and there is a plethora of budgetting tools available online, but if you're just starting out, those might be a bit daunting.  Most tools also cost money.

To help you on your way, we'll give you the basics and provide with an example budget calculator in an excel spreadsheet. You can use this one, create your own, or find another tool that works for you.

Tip: check the website of your bank. They may have budgetting tips or even a budget tool or planner that might help you.


Making your budget work

Once you have started a budget, you need to figure out a way to make it work for you. While the correct approach differs from person to person, we can give some general advice.

Wants and needs

There are probably a lot of things that you want, but there are also things that you need. Needs are things you can't go without and are vital to your wellbeing. Everything that doesn't fit into this category, is a want. A good way to use a budget is to divide your costs into these two categories. It is important to be ruthless with yourself and not put wants in your needs-category. Example: you need food, but you want potato chips.

Separating wants and needs is a good way to reduce your costs too. If you're spending too much, you'll know in which area to make your cuts.

Overestimate your costs

While some bills will be static (e.g.: mobile phone plans), others will vary depending on your usage (water, electricity,...). It's good practice to overestimate these costs to make sure you have enough money put away to cover them.

Rainy days

You can budget all you want, some expenses will take you by surprise. These could be sudden medical or dental bills, a repair or replacement of household or other items, or anything that would require a large sum of money. A good rule of thumb is to save 10% of your income to a backup fund to cover these costs.

Check and update your budget regularly

A bad use of a budget would be to create one, feel good about yourself for being responsible, and then never look at it again. Give your budget plenty of attention to make sure you have accounted for everything, add new categories when needed, and keep track of how well you are following your plan. If all goes well, you will be able to see your savings go up and have the right to feel good about being responsible!