Welcome to Week 2 of the Finshots Money Resolutions! (Week 1 resolution here)

I’m sorry, but today’s Resolution isn’t something that we can run away from. I’m talking about Budgeting! And I know we’ve spoken about it already. But we didn’t do anything tangible at the end of it all. So this time we are going to try and fix that, but not before going over the basics first.

Okay then. Budgeting.

It’s about making sure you know where your money is going. If you don’t do this, how else will you know the amount you spend ordering food through Swiggy? Or the money you slosh at your favourite watering hole? Now if you’re limitlessly rich, well, these things may not matter. But, for most of us, we often need to keep a hawk-eye on these expenses so that we save money for the big things in life — like a backpacking trip around Europe? Haven’t you heard, “a penny saved is a penny earned”?

And sure, I know that budgeting is hard. Heck, I’ve often given up because something or the other has derailed my well-laid budget. Like a surprise visit from friends or family. Suddenly, I would’ve spent an extra 10k and I would toss the budget in the dustbin. That was until I found a budgeting hack that works for me, but I’ll get to that later (in the “Secrets” section).

So, let’s set Resolution #2 — to put pen to paper, or numbers in a spreadsheet and see where you’ve spent money in the past month.

Oh, and remember that we spoke last week about exploring your feelings about money? If you haven’t done that yet, do it now before you get to Budgeting!

How long will the exercise take? 🕰️

90 minutes! Just about as much time as a game of football.

Sure, this isn’t as much fun as yelling at a TV screen. But, you could yell at a spreadsheet when you see the things you’re spending your hard-earned money on.

Ready? Let’s begin Resolution #2!

With a budget, we’re going to need a spreadsheet to kick things off. If you’re old-school (like me), pick up a pen and paper. And to help you with all this, we’re giving a free budgeting template as well. It’s a labour of our love.

  1. Let’s start with the most recent month. Download your bank statements — this includes your savings account as well as any credit cards. Include your withdrawals from the ATM and open up your wallet to see if you’ve any money lying in it. Try and remember what you’ve spent the cash on.
  2. Then assign a broad category to each of your expenses. It could be things like Rent, Electricity and Water, Phone and communication, Groceries, Fashion, Personal grooming, Childcare, Food and drinks, Subscriptions (like Netflix), Transport (include fuel, Ubers, autorickshaws), House maintenance.
  3. Once you’ve done that, let’s try and break it down even further. Take the category of Food and Drinks for instance. Can you check how much you spent on ordering in through Swiggy or Zomato? How much did you spend at restaurants and pubs? Take a look at your “Groceries” category. How much did you spend on fruits, vegetables, bread versus spending on snacks like biscuits and cakes?

Once this hard part of noting the numbers is out of the way, you might want to pause and take a breather. Because things will get a bit intense after this.


4. It’s now time to take a microscope to your spending. Look at how much you’ve spent across various categories. Does anything stand out? Are you shocked by how much you’re spending on one particular category?

For me, I was surprised at how much I spent on buying premium or gourmet ice creams, wafers, bread, and cheese. And since I bucketed it all under groceries earlier, it just seemed like my grocery bill was high. Turns out, I was splurging money on things I didn’t necessarily need.

Sidebar: If I want to create a budget that I can actually stick to without feeling overwhelmed, there’s a question that I have to answer here.  “Can I live without my gourmet ice cream fix?” If I can’t, that’s okay. Buying it makes me happy and that’s equally important. So, I’ll include that as part of my budget.

Now before you wind up with the expenses bit, there are still a couple of things left for you to do.

5.  You need to account for expenses that might be annual in nature. Say payments for your life or health insurance. The insurance and maintenance for your car or the scooter. Taxes that you have to pay. Take your time and think about it.

6.  Then there are the variable expenses. What if your friends or family stop by? It’s difficult to account for this in a monthly budget, if you dig into your old statements, you’ll be able to find out how often these expenses happen and how much you typically spend in those situations.

7. And there you have it, you’re now quite intimate with your expenses. So it’s now time to set broad guidelines for yourself to follow. Like the 50:30:20 rule for instance — 50% of your income goes towards your necessities, 30% is towards the wants you want to splurge on, and 20% is the savings for your future. That’s just one basic technique. And if you want to read more about some of these budgeting techniques, I’ve written about them here.

Once you set this up, you’ll know if you’re spending too much money and if you could save more.

PS: If you have a variable income, do this activity for the past few months. And see if you can spot any patterns of how you adjust your spending habits based on your income?

A secret for you 🤐
Budgeting doesn’t always have to be about listing down your tiny expenses in a spreadsheet. If you’re someone who prefers looking at the larger picture, try the “Net Worth Method”. You’re tracking a single number that will tell you how your overall pool of money is growing. Little expenses won’t bog you down and you don’t feel restricted by a budget.

It’s the type of budget that works for me!

The soundtrack to end it🎵
You don’t have to spend loads of money to look good or feel good. Do it on a budget and save that money for the bigger things in life!

Thrift Shop by Macklemore

And finally, don't forget to use the spreadsheet. It's simple and it will help you loads if you're just starting out.

Coming up next week 📅
Cutting back on expenses is the most common trick to fit things in a budget. But how often do we actually talk about how we can increase the income instead? That’s what we’ll do next week.

Until then...

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