Monthly budgeting – Flexibility where it counts!
Last month we tackled an easy annual budget in 8 steps and I shared our own personal family budget when travelling Europe in our Campervan, but we’ve spent the last 2 months living in a house feeding extra people and paying for childcare. This is when a flexible monthly budget comes in handy by being able to reprioritise our spending with the same amount of money, for a whole new situation.
Keep reading to the end to see how different our budget is for #HouseLife!
How to create a flexible monthly budget:
Use spending trackers or bank statements to work out these 10 (or more if needed) categories:
· Rent/Mortgage & Council Tax
· Household bills (water, gas, electric)
· Fuel & Travel costs (Toll roads, car park fee’s, public transport, etc)
· Internet & phone
· If you did the annual budget, add those final monthly figures here too.
· Activities (parties, days out, Friday nights at the pub, etc)
· Additional shopping (clothes, hobbies, health and hygiene, stationary supplies, etc)
· Food (Groceries, takeaways and top-up shops)
· Additional Categories
If you need more categories to create a better picture of your finances, go ahead! We have extra ones for our dog, launderettes, business costs, parking charges and campsites, which is adapted for our unconventional lifestyle.
· Misc
This could be money put aside for repairs, maintenance or unplanned events. If you want to combine the Annual budget method with this monthly budget, this section can be combined with the savings option.
Gather the figures you’ve added up for each category above, add them all up and subtract that total from your monthly income figure.
If you are in minus figures, then one of the categories needs cutting back.
Green categories are likely fixed numbers dictated by the companies you are with.
Orange categories likely have some wiggle room with little adjustments like changing brands, suppliers or doing more things yourself (e.g. we save a chunk of money by grooming our dog ourselves, we have drinks at home with friends instead of nights out and borrow/swap toys for our daughter with friends and family to save buying new ones.)
Red categories have lots of wiggle room. Taking time to pre-plan meals and be creative with cheaper options or just going without can save big bucks in the long run!
If you have extra spare cash each month, boost one of the categories that is important to you whether it be food out, time for new clothes or extra savings towards the unexpected!
When to update the budget
Every 3 months, take a look at your budget and adjust as the seasons change. In Summer, bills usually go down and spending on activities go up. While kids are in school, spending on activities likely goes down but additional shopping & easy food options, may go up! Use statements from previous years to give you an idea of how to plan for different seasons.
Here is a look into how our monthly budget changes depending weather we are on the road or in a house, with the same amount to spend:
When out on the road, much of our budget is taken up by basic necessities like fuel, internet access, campsites and launderettes. When at home in Scotland staying with family, we spend the money we would save in those areas on cooking for family, seeing the local area and giving our daughter a couple of days in nursery to enjoy playing with people other than us!
How could your budget flex to prioritise more of what is important to you? Its likely not going to change as drastically as ours, yet planning finances ahead of time like this, can be helpful to anyone interested in managing their money better.
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As a licenced bookkeeper in training with years of experience in managing corporate events, I’m pretty good with budgets! If you need any help with managing your personal or business budget or want help with reducing your bills, contact me for a free 30-minute consultation here.