On Wednesday, I wrote The Needy Helper Financial Step 3: Don’t Spend What You Don’t Have and in this blog post I explained that I had created a budget forecast for the month of June. So how did I do? Let’s find out.
Due to a good month playing poker, and a new contract, I actually made £683.74 more than I had forecast. The important lesson here was the success of asking employers for a forecast and actually receiving one.
I actually over spent by £319.96 but this was a conscious decision that was made after I had taken more income orders.
This is the most important part of my personal budget and one I really enjoy playing with. I do most of my banking online and I have created eleven different bank accounts. At the beginning of the year I evaluate how much money I need to save in each account. I then forecast how much revenue I think I am going to earn and create a percentage deduction for each account. Then when I receive a form of income I go online and divide my income into the separate accounts in line with the specific percentage. Here are my eleven accounts.
1. My Checking Account
This is where all of my money comes in and goes out. This month I received a £7.57 bank charge for going overdrawn when some of my income didn’t arrive on time. I have created an action to always have £1,000 in my checking account to make sure I never incur charges again.
2. College Fund
I am not sure if my son will go to College or not, and I doubt that I will be able to save enough money to pay for everything, but I will certainly be able to make a sizeable dent in his costs for him.
I have always had mixed feelings around Christmas. It is always a joyous occasion – and I love buying presents – but I always get depressed because I would go into debt to make other people happy. Last year I saved for the first time and it allowed me the freedom to enjoy without the need to worry. I had a chat with my son a few weeks ago and realised that he hardly plays with any of the things I bought him for Christmas. So this year I am going to buy him less presents, but ones he truly wants or needs, and then spend a little bit more money on joint experiences instead.
4. New Home
I am not going to live with my Mum and Dad forever and so I have started to save for a new place for Liza and I.
I already have nineteen-years of Railway pension locked away and a separate pension scheme called BRASS. I have looked at the valuation of those and would like more money when I retire and so I am putting money away to invest in a suitable retirement vehicle.
I have really had to mature in order to give money to other people. At first I was going to choose a charity but I couldn’t think of one that was close to my heart. Then I decided that I would help people who are close to me instead. This time I am saving to send my three sisters to the Landmark Forum because I think it will change their lives and bring us all closer together as a family.
7. Las Vegas
This is a little bit of me time. The one time per year that I get away and treat myself. That being said I also work my arse off! But in between the fifteen-hour days I get a few days off and I like to play poker and see the shows. In order to be comfortable and not worry about money I save up for this trip.
8. Jude Holiday
I save money to take my son on a great holiday once per year.
9. Liza Holiday
Same as above but with my girlfriend.
When I worked on the Railway all of my taxes would come straight out of my pay before I received my cheque. These days I have the responsibility of paying them myself. So every time I earn a single penny I use 20% of that income to purchase Premium Bonds. Then when the tax time arrives I withdraw my money and pay off my taxes. The reason I buy Premium Bonds is because the interest rates in savings accounts are so low and with the Bonds there is a chance you can win cash prizes up to £1 million. You never know!
11. Emergency Fund
The emergency fund is actually Needy Helper Financial Step number 6, so I am not going to go into it in much depth here. But in short it is a savings scheme that I can use to delve into when an emergency strikes. The idea is the creation of Dave Ramsey in the TOTAL Money Makeover.
Here are the lessons that I learned from the June budget process that can now be implemented in my July process.
1. I love going to the cinema and there is no reason why I cannot pre-plan my movies.
2. I overspent on my son’s holiday. I saved £2,000 and am going to end up spending £2,500 – £3,000. I am still struggling with the best way to be a great Dad and spending money on him is one area that I am unbalanced. I also promised him I would take him to Universal Studios and, after realising that I break too many promises, wanted to keep this one.
3. There were some things I didn’t budget for because I didn’t think hard enough. One classic example is the taxi’s to/from the casinos. This will improve month after month and the process will become more and more accurate.
4. I incurred an overdraft fee because I was not smart and didn’t keep enough money in my checking account. This was an own goal and I am going to make sure I have £1,000 in my checking account at all times.
5. I need to understand more about investments so Jude’s college money and my retirement money can work better for me.
6. I have never been so mindful about money. I have saved so much money by refusing to spend on things I simply do not need. I have also really enjoyed the whole process. Did you know I would spend at least $10 per day on Starbucks whilst working in the Rio Casino. This month I spent zero! Do I miss Starbucks? Not at all. It seems I bought coffee as a habit not out of necessity of enjoyment.
7. My biggest overspend was eating out. I underestimated Las Vegas! When you are working fifteen hours per day you just don’t want to sit there with your lunchbox. You want to break free and get away from work, see friends and have some fun time. I have re-adjusted my July figure for eating out.
8. I SPENT LESS THAN I EARNED! I can’t remember the last time this ever happened! So it’s early days…screw that…who cares if it’s early days. I SPENT LESS THAN I EARNED! If I continue to do this each month then I will become financially independent sooner rather than later.
What lessons have you learned form this? Do you have any budgetary ideas and advice you would like to share?
Photo courtesy of 401K 2012 (cc @ Flickr.com)