No, I am not being forward and asking for your mobile number – I want to help you find out the number YOU are left with at the end of the month.
Everyone knows how much is coming into their account each month – PAY DAY (woop! woop!) – but most people will only have a rough idea of how much is leaving their account.
Some people even bury their heads into the sand to go out of their way to not see how much cash they splash, as they do not want to face up to their spending habits.
This needs to change.
If you have any hope of creating a financially secure future for yourself (and famalam) then you need to know what is entering and exiting your bank account so that you can plan on how much you’re going to save and/or invest per month.
Now, if you’ve read some of my other blogs you’ll have correctly identified that I am that lame person who looks forward to month’s end so I get to fill in my monthly budget google sheets template.
I’m now going to give you access to the same budgeting template in excel to work out EXACTLY how much you spend per month.
….Hopefully you get a pleasant surprise? (Let me know!)
Here is my pride and joy, my everything, my sacred template:
Once you’ve opened it, only concern yourself with the tables ABOVE the black line for now.
On the left hand side the first table is your salary coming in, while those on the right focus on what is going out.
You can see that there is a column for monthly / quarterly / annual payments.
To truly achieve an accurate representation of what is leaving your bank account every month on average across all 12 months you need to consider those quarterly and annual payments.
Divide the quarterly payments by 4 to equal a ‘per month’ equivalent.
Then take those annual payments and divide them by 12 to give you an idea of what that annual lump sum payment per each bill actually costs you per month.
I have included an extra row at the bottom of each table – called ‘other’ – so that you can add in any extra costs (or income) that is unique to you.
Right, you’re all set.
Now total each column up…
…take a deep breath…
And subtract the ‘TOTAL OUT’ figure from the ‘TOTAL IN’ figure:
What is your number?
If you’re in the red (minus figures)
Go back to my post on – how to budget: part 1 – and go through your bank statement to identify any spending patterns or unnecessary subscriptions/expenses you have and: cull them.
The only way to free up more money is to either work more or spend less.
Stay tuned for my upcoming posts on how to handle debt payments.
It’s going to be tough but work really hard on getting yourself into plus figures at the end of each month because it really will be worth it in the end.
If you’re in the green (plus figures)
Excellent, you’re on your way to becoming more financially secure, now all you have to do is maintain it (easier said than done).
As I touched upon in my last blog post, you should expect to see approximately 60% of your monthly post-tax income going towards your necessary expenses.
The remaining 40% can then be further divided into the following:
20% – to live off for that month, whether it be on food/socialising/shopping etc
10% – to go into your “savings” account (money you will need to access within the next 3-5 years)
10% – to go into an “investment pot” (money you do not need for >5 years)
This investment pot is usually put towards: property, stocks & shares or other asset classes…..more on this in future posts!
This is where those tables BELOW the black line on my budgeting template come into play.
All too overwhelming?
That’s ok it is a monster subject.
Over the next few blog posts I will break this down even further into digestible nuggets so that you can really get to grips with your finances.
This is exciting stuff(!)……..or perhaps I need to get out more
1. Download the spreadsheet
2. Enter your monthly figures
3. Set a date and do this every month (I choose to do it on the very last day of each month)
I intend to cover how to make that 40% split (20/10/10) easier to manage and a brief rant about the importance of a contingency budget – a.k.a an emergency fund!
I decided to go rogue and give you an animal fact instead, as I’ve remembered this since I was 9 years old and feel compelled to share it:
A Coral snake is x10 more poisonous than a King Cobra……and a King Cobra with one bite can kill an elephant within the hour. Whoa.
…..enjoy the rest of your day!
The content in my blog is not making any financial recommendations but only my opinion and interpretation of what I’ve learnt. Please seek professional advice when it comes to your own personal circumstances
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