The main idea behind this whole blog, if you don't know by now, is to track me saving $100,000 -- and by doing so, maybe you'll be able to observe a few pointers that will help you save.
The most important thing my mother ever taught me is the concept of budgeting. Without a budget, you don't have a clue about what is actually going on with your finances. My mother taught me how to budget by using Microsoft Excel. I found the program extremely helpful and it added up each of my general expenses very efficiently. However, after buying a new computer that didn't have Excel, I reverted to a leather journal to document my spending. I can't imagine switching back to Excel, as I love my journal.
Before we break down the exact categories, I must tell you that you need to first create an income that exceeds your expenses. This is fundamental to saving money. If you have more expenses than what you make, then you will rely on credit and you will go into debt. Seems simple, but tell that to millions of Americans, and Canadians, who are in debt.
So, now that we have established an income that exceeds our expenses, you must create categories for your bills. I have very general categories because I am a bachelor who doesn't have many unusual expenses.
My expenses are as follows:
Food ($200),
Miscellaneous ($100),
Gas ($50),
Internet ($20),
Car Payments ($290),
Car Insurance ($140),
Presents ($20),
Clothes ($20),
Vacation Fund ($0),
Car Maintenance Fund ($0),
Hair Fund ($5),
Phone ($75),
Student Loan ($30) and,
Rent ($700).
Total: $1,700.
You might notice that I have a very low miscellaneous account. This is true, but if you set some money aside each month for normal miscellaneous expenses, such as hair, vacation, car maintenance, clothes and presents, you will have fewer miscellaneous expenses. This can also help you keep your expenses consistent, rather than having a lump sum come out of the account for say, car maintenance. You might also notice that several of my accounts have no funds committed to them. This is something I am working on and I hope to dedicate more to these funds when I get a pay raise in two months. I can also dedicate to the hair fund, for example, one month, and then switch to vacation the next.
Next is net income. I earn from my job $1,017 every two weeks. I am slated to start getting paid semi-monthly beginning in April. This month is nice because I get three paycheques. So I can multiply $1,017 by 26 and then divide by 12 (months) to get my monthly income of approximately $2,200. I can then assume that if I follow my budget, I will save $500 each month ($2,200 of income - $1,700 expenses). However, I am subletting my apartment in Vancouver and making a profit of $150, for monthly savings at $650. Are you with me? However, I have challenged myself to save $1,000 per month so that I can have my $100,000 withing six years (after opening a margin account and assuming 10 per cent interest, which I will get into with a separate post). So I need to come up with another $350 per month. Where can I find this money? Online! Because I am a writer and soon to be professional blogger, I can earn $350 per month, if not more. So far this month, I have earned another $120 from writing online content -- and I am waiting to start making money with this blog, if Google Adsense will ever get back to me.
Where you can find the extra revenue to meet your goals depends on your skills. I'm a writer, but you may be a musician who is able to teach guitar. I'm also exploring opening a pie business and should have that running by May. I already have a spot on the local TV channel for a cooking show.
So, there you have the basics of budgeting. Please comment if you have any questions and I'll be sure to answer. Happy Budgeting!
The most important thing my mother ever taught me is the concept of budgeting. Without a budget, you don't have a clue about what is actually going on with your finances. My mother taught me how to budget by using Microsoft Excel. I found the program extremely helpful and it added up each of my general expenses very efficiently. However, after buying a new computer that didn't have Excel, I reverted to a leather journal to document my spending. I can't imagine switching back to Excel, as I love my journal.
Before we break down the exact categories, I must tell you that you need to first create an income that exceeds your expenses. This is fundamental to saving money. If you have more expenses than what you make, then you will rely on credit and you will go into debt. Seems simple, but tell that to millions of Americans, and Canadians, who are in debt.
So, now that we have established an income that exceeds our expenses, you must create categories for your bills. I have very general categories because I am a bachelor who doesn't have many unusual expenses.
My expenses are as follows:
Food ($200),
Miscellaneous ($100),
Gas ($50),
Internet ($20),
Car Payments ($290),
Car Insurance ($140),
Presents ($20),
Clothes ($20),
Vacation Fund ($0),
Car Maintenance Fund ($0),
Hair Fund ($5),
Phone ($75),
Student Loan ($30) and,
Rent ($700).
Total: $1,700.
You might notice that I have a very low miscellaneous account. This is true, but if you set some money aside each month for normal miscellaneous expenses, such as hair, vacation, car maintenance, clothes and presents, you will have fewer miscellaneous expenses. This can also help you keep your expenses consistent, rather than having a lump sum come out of the account for say, car maintenance. You might also notice that several of my accounts have no funds committed to them. This is something I am working on and I hope to dedicate more to these funds when I get a pay raise in two months. I can also dedicate to the hair fund, for example, one month, and then switch to vacation the next.
Next is net income. I earn from my job $1,017 every two weeks. I am slated to start getting paid semi-monthly beginning in April. This month is nice because I get three paycheques. So I can multiply $1,017 by 26 and then divide by 12 (months) to get my monthly income of approximately $2,200. I can then assume that if I follow my budget, I will save $500 each month ($2,200 of income - $1,700 expenses). However, I am subletting my apartment in Vancouver and making a profit of $150, for monthly savings at $650. Are you with me? However, I have challenged myself to save $1,000 per month so that I can have my $100,000 withing six years (after opening a margin account and assuming 10 per cent interest, which I will get into with a separate post). So I need to come up with another $350 per month. Where can I find this money? Online! Because I am a writer and soon to be professional blogger, I can earn $350 per month, if not more. So far this month, I have earned another $120 from writing online content -- and I am waiting to start making money with this blog, if Google Adsense will ever get back to me.
Where you can find the extra revenue to meet your goals depends on your skills. I'm a writer, but you may be a musician who is able to teach guitar. I'm also exploring opening a pie business and should have that running by May. I already have a spot on the local TV channel for a cooking show.
So, there you have the basics of budgeting. Please comment if you have any questions and I'll be sure to answer. Happy Budgeting!
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