I have always had a weird relationship with money. I used to have an issue with spending my money on bigger purchases (such as clothes or something I had saved up for) yet I could excuse spending it on smaller purchases such as coffee and takeaway (which added up quite quickly). On the other hand, if it was money my parents gave me for a holiday or something, I would spend that money before it had truly processed that I had it.
Until the start of this year, I couldn’t tell you a single month where I hadn’t run out of money by the 20th. I would spend it all on useless or stupid things (such as three coffees in one day) and then have no money for the rest of the month when I actually needed it. That is why I decided to sit down and seriously work through my finances at the start of this year. Having moved out I couldn’t afford to run out of money that quickly. This post will mostly be an overview as to how I allocate money in my budget.
Creating a budget:
I sat down with my dad and we decided on a figure which would be my budget each month. However, as neither of us knew how much I might need as I was the first child to move out, that conversation came with the proviso that should I need more money, I could ask.
My money I receive from my dad gets allocated to four categories: personal money/pocket money, groceries, petrol, and other expenses. I’ll come back to the money that gets allocated to pocket money later. The rest of the money gets allocated so that groceries take up the most, followed by petrol and then other expenses taking the least.
From there, it is easier to visually see how much money I have each month for my various expenses and I can then track where I may need more/less money. I then take the amount of money I have allocated towards groceries and work out how much I have at my disposal each week by dividing the amount in four.
I then sit down and I plan out which meals I want in the week, what ingredients will be needed and what other food I may want to keep around for snacks. Once that has been sorted I will make a grocery list. Using the Pick n Pay and Woolworth’s apps, I will work out how much that food comes to and what deals I will get if I buy in bulk. For instance, it is often cheaper to buy refill packs for things such as coffee than buying a new jar when you run out.
Personal money/pocket money:
When I was younger, say five or six years old, my parents began teaching me about the importance of spending money wisely. They used to give me R10 in R1 coins and they would sit with me while I sorted it. I would put R1 (10%) towards saving, R1 (10%) towards investing and R1 (10%) towards tithing. After that, I would have R7 (70%) to spend on whatever I liked. Being so young it was a good lesson to learn. However, I fell out of the habit and stopped doing those three things before spending my money.
I decided that this year I would get back into the habit. I split my money up into those four categories when I get the money so that I’m less tempted to try to spend it all in one go. It is a good habit to get into. You’re continuously saving and investing a small portion of your money which will grower time and you’re giving away some of your money to the who need it.
It is a similar practice to what will happen when you have debit orders coming off every month to pay for rent, electricity, insurance, etc. It is better to have the mindset that the money that is at your disposal is what is left after you have covered your expenses and put some of it away. Warren Buffet once said, “Do not save what is left after spending, but spend what is left after saving.”
I decided to put some money aside for expenses such as medicine, stationary or electricity. They aren’t things I have to buy every month but there will be times I need a little money here or there that I would otherwise take out of my groceries allowance. I’ve done this a few times now and ended up short because I hadn’t prepared for these instances.
So that is how I allocate my money each month. If you have any questions feel free to drop a comment below or get in touch with me directly.
Have an awesome day!