Hey Budgeting Buddies!
Not going to lie, it has been one heck of a year. However, I hope that everyone is well, safe and/or recovering. Regardless of whether you have been directly affected or indirectly affected, or even if you were not affected at all, I wish you all a better year in 2021.
It is now time to do one of my favourite things to do for a New Year… is my brand-NEW budget for the year! Yes, I am one of those people that gets excited over a new spread sheet. So, here it is!
For my income, I am getting my normal €430 a month from work, as well as an additional €50 which was a Christmas gift. In total, I have €480 in discretionary spending for January.
My expenses, as usual, are in order of my personal priorities. I prefer this method because it makes budgeting for my goals easier.
Starting with debt, I am going to be putting €100 into it. I am re-starting small because my discretionary spending is much smaller than it used to be. I will also have to put money into other categories. I am hoping that later in the year, that I will be earning more money, and I will be able to put more to debt.
The second highest priority to me, is my emergency fund. This has been completely emptied (a few times) over the last six months, so I must begin rebuilding it! This means I will be putting €100 into my E-fund this month. My goal for my E-fund is at least 6-months of average living expenses saved.
If you are wondering, I am not going to be solely focused only on my E-fund, because the interest rate on the debt would have a negative effect on my mental health. It will put me back financially and I want to be affecting my Networth in both directions (reducing liabilities / increasing liquid assets). If I stopped paying debt, until I had a big enough E-Fund my debt would have increased by several thousand pounds.
Even if I were only aiming for an €1,000 E-fund, that would still take me 5 months, and would also increase my debt by about £3,000. In my humble opinion, not worth it. I would rather be paying just interest and a tiny bit of principle. The process may take longer; however, I won’t have to fight against compound interest.
The third biggest priority for me is paying taxes. I will be adding €100 to my tax savings and I am hoping that I will have enough saved to cover the bill. I will owe just under €600 for 2020. Unfortunately, I already know that I will need to spend some other savings to pay this.
The next category I have is my general savings and my savings challenge, which I will be restarting in 2021. This is one of my favourite categories as it means that I have more freedom. Putting money away to create more choices, and a buffer for me and the world. I usually budget a set amount, and then I separate it between the weeks of the month, for my saving challenge. I do this because it gives me something to look forward to each week, as I get to put my savings in my little cat money box.
My next two categories are my Phone and Spotify. These are my two set bills that I get every month. They are must haves because I need to have a phone for my job. I also must have Spotify because I walk a lot for my mental health, and the music accompanies my walks. So, €35 goes towards those.
I am also hoping to utilise sinking funds more often to cover the cost the blog, and expenses related to it. In previous years, I have just used savings or money for other categories from the month of December. HOWEVER, I hate doing this. Not only does it stress me out, but it means that I don’t have enough to pay for other things that I need.
My SA category is my moving fund. I am going to moving internationally soon, and I will need some extra money to make my transition as comfortably as possible. While it won’t be a lot of money, it pads out my savings. It will give me peace of mind to have extra cash saved.
The therapy category is for my therapy. I am currently trying it out. I wanted to have some money aside if I do want to continue with it. However, I don’t want to put too much aside, in case I end up not doing therapy.
My other categories: gifts, other and fun don’t have any money put to them this month. Mainly because I don’t have any birthdays this month, so I don’t have to buy any gifts. My “other” and “fun” categories won’t be needed this month because there seems to be another lockdown on the horizon, so I can’t go out anywhere or buy anything.
And that is my January 2021 budget.
I think the biggest struggle I am going to have is sticking to my €0 “other” category. What is your biggest budget struggle?
How are your budgets coming?
Are you guys excited for the upcoming year?
What is your biggest financial goal for the year?