New Year. New Budget!
Jan 12, 2020
I was excited for 2020 to begin. It’s always had a great ring to it, it sounds forward-thinking and futuristic.
2020
As 2019 drew to a close one of the things I was looking forward to - and I can disclose this here, in this safe personal finance community of like-minded people - was the fact I get to start a whole new BUDGET for 2020!
And when I checked in on things on 01.01.2020, this screen stared me in the face, waiting for me to START my budgets:
My PocketSmith screen waiting for me to click the START buttons to start my new budgets for 2020.
Ahhhh, the opportunity!
I’m telling you this in my first blog post of the decade because I’m convinced that tracking income and expenses are a major reason why and how people take control of their money. If you can understand where your money comes from and goes to then the battle is half won and it’s not just for people who have limited incomes and have to stretch their money, it’s incredibly helpful for those who make a lot of money but never seem to have any.
I’ve now completed a full calendar year of using PocketSmith for all of my budgeting and for all those people who enjoy tracking and enjoy using a spreadsheet, you’ll know how I feel right now.
Jonny is pretty excited about it too (NOT!) especially when I start a conversation with things like:
“Hey Jonny, guess how much we spent on groceries this year?”
Correct answer: $11,176.54.54. An average of $214.93 a week (I failed in my attempt to get it under $200 a week).
“Hey Jonny, guess how much we spent on electricity this year?”
Correct answer: $1527.52. An average of $127.29 per month. Not too bad, I’m OK with that!
“BUT, guess how much we spent on diesel for our central heating Jonny?”
Correct answer: $1381.96. An average of $26.57 per week!
But then Jonny points out to me, that it was a pretty cold winter down here in Central Otago, he does work from home and the house is warm 24/7. Fair point.
Just one more…
“Hey Jonny, guess how much we spent on petrol this year?”
Correct answer $3301.51. That’s $63.49 a week! Ouch.
Which then lead onto a discussion of whether that was high or low given the fact that we drive around our small town of Alexandra but then we regularly drive an hour to Queenstown, or two and a quarter hours to Dunedin, or six hours to Christchurch. I now vow to walk to work more!
Honestly, this information is GOLD to me because if I know what we spent in total in 2019 ($950 a week plus investments), then I know what we are likely to spend in total in 2020 and for this couple who both only work part-time it’s really important to know these details because I’m always trying to stick to the plan of “spending less than we earn” so that we can create a surplus to invest and that’s exactly what we managed to do in 2019.
PHEW!
If I didn’t have this information and you had have asked me what we spent a week, I would have guessed far less than this amount and to be honest, it shocks me how expensive the basics of life have become, but I can’t hide from the facts, the numbers don’t lie, but I can use them to prepare for the year ahead and make sure we have the income coming in to cover all of our expenses.
I’m not a goal-orientated person. In fact, there was a comment posted on my blog which said: “goals are for people who have no motivation” and it really resonated with me. But I am a motivated planner and noting what we earn, spend and invest is incredibly helpful to me because it allows me to plan out situations for my family and that’s how we avoid panic situations during the year and manage to avoid any and all financial emergencies.
Things I’m planning for in 2020 are:
Braces for my daughter: For a long while now I have been transferring $40 into this account and there will be plenty in there for her treatment;
Car insurance is due in one lump sum in March: I’ve budgeted for $850 and have set this amount aside already.
A holiday! When we returned from our last trip I didn’t stop the automatic payment into our holiday fund and it continues to build…$1,000 and counting...
The beginning of the year is always a time where people vow to begin something new and by the number of people that have joined my blog over the last month, then my guess is that ‘sorting out my money’ is on the agenda for many. BRILLIANT IDEA! So, I really encourage you to start tracking your earning and your spending, because that’s the key way to pay off debt, improve some poor spending habits, afford the life you want to live and have money available for investing.
I’ve said it before and I’ll say it again: it does not matter how you track this.
I started with a pen and paper, writing down every expense, then moved onto a spreadsheet I had made myself, then I tried an American online budgeting app (Every Dollar) and then settled on using an app that I pay for, PocketSmith (a Dunedin company no less!). And they have a FB page “PocketSmith Pals” with an active community too which is helpful when you are getting started. So, create or buy whatever system resonates with you and your whanau and really commit to understanding the income and expenditure of your life because like I said, I’m forever letting people know that understanding this is the key to getting ahead financially.
