There is a lot of information on budgeting and I personally have no opinion on which is better to use. What’s important is to know yourself and use the option that works for your personality, lifestyle and lifestage. If you never have cash on you, using cash envelopes won’t work and if you’re a low earner using the 50/30/20 method will be a stretch.

I personally make a reference budget at the beginning of the year and I tweak it as the year goes. One thing I keep in mind as I do the budget is my savings goal for the year. With this I make tweaks on what I can spend more or less on to achieve the goal.

My budgeting is done in three buckets which are fixed spend, variable spend and sinking fund. Everything I spend on needs to fit into those three buckets somehow and they do. Of course if I identify a need for another bucket, I will add it in.

What I have in fixed spend are recurring expenses that don’t change in value month to month unless there’s a price review from the provider. The expenses here are rent, electricity, Internet & netflix subscription, childcare and TV charge.

My variable spend is a very short list of groceries, child spend and fun money. These are regular spend I make that are not predictable. So I budget an average amount and I spend more or less depending on what’s needed.

My sinking fund is a long list of one off spend that happens at fixed or non fixed time in the year. There are two ways to do this, I could plan the spend in the months they will happen or use the sinking fund methodology. Planning in the months they will happen have one key con for me which is I may not have enough cash inflow to cover all my cost in a particular month. My sinking fund broad coverage are family, health, subscription, selfcare, insurance and child fund.

My budget remains fairly stable all year and I mostly make tweaks to my sinking fund when a spend I missed to plan for pops up. Examples of recent additions are a sinking fund for my glasses replacement, a sinking fund for gadget replacement. There are also sinking funds I find I no longer need that I stop.

I track my spend regularly but only the variable and sinking fund portion. The fixed part does not change more. I track mainly to ensure I’m not overspending and to adjust my budget when needed. It’s okay if I miss my saving goals as I also need to live.

Budgeting and tracking your spend can be very difficult but once you start, you will get into it and start to enjoy it. One way to do that is gaming it and giving yourself small goals like can I spend five percent less on groceries this month and how do I do that.

I use an excel file I created for my budgeting and spend tracking. You can use whatever is convenient for you. There are phone apps, web apps, paid excel and googlesheets that can be used. Good ol pen and paper will also suffice as long as you can make the budget and track it.

Goodluck starting your budgeting journey and ask me anything that you need help with.

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