How to set up the best budget planner book to track your monthly expenses
As you might have read from my previous article, my husband and I started aggressively saving for a motorhome, and we have successfully stashed £10,000 since September 2021, on average salaries. Pretty cool huh! Did we increase our income? No, not really. Did we learn how to spend less? You betcha. We would never have been able to do this without our trusty budget planner journal.
A key factor to achieve this milestone was gaining a deep awareness of how we were spending our money every single day. If you have ever arrived a few days short of payday asking yourself: where the heck did my money go?! then you might want to continue reading, as I will share the exact method I used to set up a budget planner book.
Mark my words: small spends compound. The ‘where did the money go’ question is a good one, because chances are that you didn’t make a big purchase that compromised your position at the end of the month; more probably, you incurred many smaller expenses, which taken individually are no big deal, but in 30 days they will have compounded to a few hundred quid.
An example: you enjoy grabbing your breakfast on your way to work, and let’s say that in this economy, a flat white and a croissant cost £5.50. You have a full time job but your employer has adopted a hybrid working model, so you might buy your breakfast 3 times per week: that’s £22 per month for breakfast.
Lunchtime: you buy a sandwich and a drink from Pret: shall we say it’s about £6? Three times per week for a month amounts to £72.
After work or in the weekend you hang out with your colleagues/friends and have a drink or two, plus dinner, and this happens once per week: £60 per month maybe?
A £15 Deliveroo once per week: £60
Just with non-necessary food expenditure, this comes round to £214 per month! And we didn’t even come to stuff like: make-up, household decor, accessories, gadgets for your dog, and all the other things you buy that you don’t really need, and that are definitely less important than achieving your savings goals.
So how do you get on top of where your money goes? You track it. By hand. On a notebook.
I was inspired by the philosophy of the Japanese Kakeibo: the household ledger that encourages you to lead a satifsying, abundant life by owning only what’s essential, and being mindfully aware of how and why we consume.
This is how I do it.
1. GET YOU A BUDGET PLANNER NOTEBOOK
You might already have lying around an empty notebook you bought because you can’t resist stationery. Or if you don’t, get youself the cheapest notebook you can find – I purchased mine for 0.80€, an A5 squared exercise book.
This will be your best friend: a budget planner journal that will help you become a savings powerhouse.
Spreadsheets are also great: as an accountant I love me a good spreadsheet. However, we are not really prioritising time efficiency here, especially if you’re a beginner. What we want, is to exercise the mindfulness muscle every time you whip out your wallet. Writing everything down in a notebook means you have to carve 5 minutes out of your daily routine to think about what has contributed towards the bottom line. And this is the best way to do it: holding pen on paper, and journalling the results of your actions black on white.
2. SET UP YOUR MONTHLY BUDGET PLANNER SPREAD
Write down the month at the top, and divide the page into three sections:
- Income: this should be the net income you receive every month. If you’re on a salary, write down the net salary from your payslip. If you are a freelancer, I would recommend setting 20% of your income aside to pay taxes, and only account for 80% of each invoice as net.
- Fixed expenditure: these are all of the spends that you know the amount of, that leave your bank account every single month. For example: rent/mortgage, Council Tax, phone bill, internet bill, monthly subscriptions, etc. These are typically the costs that you can’t control the amount of, so they are not flexible, or very difficult to change (eg: you can only reduce your rent if you move house).
- Variable expenditure: this is where the true budgeting happens. Divide your expenses into a few categories that make sense to you. Categories may vary from person to person depending on what your lifestyle is, you can see an example of my categories below. You will then create two colums: one for your budgeted expenditure (how much do you aim to spend on each category this month?) and one for the actual expenditure, which you will calculate after the month is ended.
I recommend not having more than 6 categories, otherwise it gets too complicated to track.
What you’ll need to do next is assign a colour code to each category, like so:
Then you need a spread to log every single transaction that goes through your bank account. In the next page, create some colums for date, description, and amount of the transaction.
Every single day, just before you start your working day, you should open your previous day’s transactions, and log every single one of them on the notebook. You will then colour code them in accordance to the key you created for each category:
At the end of the month, you will have every single transaction coded to each category.
3. END OF MONTH REVIEW
At the end of the month, you will then add all of the spend for each category, and write it under the ‘actual’ column.
For an end of month summary, you will total of your income, and subtract the total fixed and variable expenditure, and there you have it: your monthly savings. You can then decide where they should go: are you building up your emergency cash fund (which should be about 6 months worth of expenses)? Or maybe you are saving up for a down payment? Or a holiday? Shovel those sweet, sweet savings in whatever pot deserves it most.
The benefits of setting up a budget planner journal
Writing my expenses on my money journal has effectively been a life-changer. It has forced me to observe the effects of my spending habits, and taught me to reflect before giving my money away. I found myself asking questions such as: do I need this? Can I afford this? Will I actually use it? How am I feeling today, and is this affecting my desire to spend? Can I fix what’s broken before buying a new one? Is this worth delaying my motorhome purchase?
And so on. And what do you know: life can be enjoyable and filled with abundance even without all the stuff I would have bought, had I not started being mindfully frugal.
If you have a savings goal (and you should, always, have a savings goal), I would invite you to try this out, and start to enjoy the benefits of owning less, and resisting the pull towards consumerism and capitalism. It feels great, and you might have a healthy stash of your own in no time.
Other articles you might like
- How my husband and I saved £10,000 over 8 months
- You need to read this book if you want to understand investing
Greetings! Very useful advice within this article! It is the little changes that will make the greatest changes. Many thanks for sharing!