November 19, 2013 at 13:49Budgeting. How to do it and why?
Everyone who uses personal finance accounting programs gradually comes to budgeting. The reasons, for sure, are different for everyone, but actually come down to one thing: to make your financial accounting more efficient, i.e. to have more money in your pocket, because that's why people start counting it.
The problem is that not all budgets will make your spending more moderate, your behavior more reasonable, and your financial balance more "positive." The reason here is not only in your consumer habits, but also in how you approach budgeting.
As always, if you approach the issue systematically, the result will be more predictable and enjoyable. And what could be more systemic of the public finance system? And from there we take the main points for the formation of a personal budget.
The question seems to be indisputable (with a goal it’s always better than without it), but few people ask this question before putting the “15%” figure in front of the “Food” column. And in vain. Because it is the goal that should determine opposite which graph to put what figure.
Recently, the federal and regional budgets have always had a social goal. This is partly dictated by the election promises of one person, partly by the low efficiency of other types of budget expenditures, partly by the low level of public debt and large reserves of the national welfare fund and reserve fund. But if we recall the beginning of the 2000s, then the main task of the federal budget was to pay off external debt, which we managed to cope with by the middle of the decade.
Thus, the budget should always have a goal. In the case of personal budgets, the goal should be clear and tangible.
Here are just a few options for budget goals:
It would seem that all these goals are very similar. At least by the fact that they offer to postpone part of the funds instead of spending them. Why is it simply impossible to write: “postpone 10, 15, 20, ..., n thousand rubles,” and the rest is already to be written down by cost category? Because it is important not only how much you save, but also what you save.
For example, the first paragraph can be considered as an investment if you give a couple of thousand rubles of interest and / or credit card fees every month. Thus, repayment of debts will allow you to get rid of these monthly useless expenses.
Second point- this is a mandatory one-time waste, i.e. you can’t avoid it, so you will either borrow for a birthday party, or you will learn the basics of Orthodoxy (no hatred) until your next paycheck.
The third point is probably familiar to many. Yes, this is the Motorola C350! But in the context of budgets, this is a waste, which requires 1-3 months to set aside part of their income. Those. not too long-term financial goal. Practice shows that the usefulness of these goals is also often not too “long-term”.
The fourth point is already more interesting. It does not involve large one-time expenses (suppose you already have a "colorful" shotgun), but if you play four times a month, you will end up with a pretty round sum. This is the first reference to the uniformity of costs, which will be discussed below.
Fifth point- This is a very long-term goal. Its usefulness can also be called into question, but it’s important that you want to fulfill it and this will require a very serious organization from you, as well as a long significant limitation in your means. Sounds like a mortgage, huh? This is it :)
The sixth point is the budget in its purest form. Those. The default goal for every budget.
If you often encounter a situation of lack of funds in the last days before the next income, set yourself goal number 6 first. You should not rush and immediately save up for a new Rolls-Royce Wraith, since the habit of limiting spending should first become a habit, and this can take up to six months or more. The next item should be goal number 1. In general, we will also talk about debts somehow. Further, numbers 2, 4, 5. And if you already passed the mortgage, then you can afford the Motorola C350.
Programs for accounting for personal finances practically do not provide the possibility of budgeting funds over time. Although this practically does not allow to achieve the goal under paragraph 4, and most importantly, under paragraph 6. Achieving other goals is also difficult.
Again, we turn to the state budget system. Often you can hear criticism from the governor, mayor, city manager, etc. in relation to committees, ministries, departments, etc. for low budget execution. And this criticism begins to sound as early as March, when, it would seem, it is still possible to fulfill such a budget that they will criticize for something completely different and completely different people.
The reason is that sovereign men understand that they cannot fulfill the budget over the past two months (jokes about Sochi are welcome) and require a uniform, where possible, disbursement of funds throughout the year. In addition, this simplifies the work of the Treasury, which happens, does not have time to sign payments to everyone at the end of the year, but such problems should not arise with personal finances.
In addition, a uniformly distributed budget allows, as already mentioned, more efficiently achieve goals, because by the end of the month you will not be left with a choice: to eat or pay for a mortgage.
And also it allows you to normalize your consumer behavior. You do not encounter a situation where you are forced to significantly limit your spending for several days, because you have 500 rubles in your pocket until the end of the week. Accordingly, you do not have a deferred demand for pleasure, which you satisfy hypertrophically after receiving income. This means that you sleep normally, eat well, smile like on cliparts and feel good and confident.
To do this, you need to take your income, subtract from them the constant monthly expenses (rent, rent, travel, Internet, gym, etc.) and divide the remaining money by the number of days in a month.
You will get some kind of figure that will be your daily budget. Usually this stage makes you wonder if you need a Motorola C350? If in doubt, take its price, divide by the number of days in a month (or several months, if you save several months) and subtract from the daily budget.
The daily budget is not a very good indicator due to the instability of daily expenses. As a rule, for many it will be lower than a good trip to the grocery store, but this does not mean that if you gathered for food in the evening, then you will go to work on foot. Therefore, it is better to multiply it by 7 and work with a weekly budget.
Also, keep in mind that your consumer behavior is changing over the weekend. For me, for example, on weekends, my expenses increase three times. This should also be reflected in your budget on weekdays.
PS The simple model described in the framework of the second thesis is based on the Max 4 Kraynov system of the envelope www.4konverta.comand is suitable only for budgeting with stable periodic (usually monthly) earnings. I’ll try to write sometime about budgeting with non-recurring income.
Problems often arise here, especially if you remember about “15%” opposite the column “Food”. As a rule, these figures are taken from the head according to the principle: "I’ll write less - I’ll spend less." Of course, this rule does not extend beyond the head.
The “reality” of the budget in the state system is partly provided by the budget code, which does not allow the formation of a budget with a large deficit. In addition, low execution allows you to have account balances, the regions themselves can, in which case, attract a little "cheap" money from the market, and also during the year to place available funds for a very short period (several tens of days) at a small percentage in banks.
In general, in the budget system there are a bit more instruments for ensuring balance; in the system of personal finances there are only own revenues and calculations. Therefore, specific figures, how many percent are in which category, should be transferred only after you have calculated your daily and weekly budgets.
In addition, these figures are relevant only for those expenses that cannot be attributed to goals, daily and weekly expenses. Because the volume of these costs is usually stable, and at the first stage you better not cut them substantially, but just keep them in mind.
And only after you have set mandatory goals from the budget, stable monthly, weekly and daily expenses, you can take the rest of the budget and distribute it “out of your head” to those joys that are not part of your goals and do not ensure your daily existence. No funds left for "joy"? Welcome to our world! :)
Take a person with a monthly salary of 30,000 rubles.
Suppose he pays every month
Total: 10,000 rubles.
Thus, 33% of the budget goes to stable monthly costs. 67% (20,000 rubles) remains.
If there are no mandatory goals in the coming month, then we can proceed to the calculation of daily and weekly budgets. If there are goals, then they must be subtracted from the remaining 20,000 rubles. and distribute the remainder.
Suppose a person has no mandatory goals, so in November he has 666 rubles per day or 4662 rubles. in Week.
Here you can already take into account the difference in behavior on weekdays and weekends. Suppose, at the weekend, the cost doubles, i.e. the budget on weekdays will be 518 rubles, and on weekends 1036 rubles.
Now for the daily / weekly expenses:
In one working day, our estimated person spends 80 rubles. to travel in transport and 150 rubles. for lunch.
To understand how much this takes up interest in the monthly budget, you need to understand how often do you use public transport on weekends? If so, multiply 80 by 30, plus an additional 1.2. This ratio will provide the "reality" of the budget. For different expenses and for different people, it will be different, but in the general sense, 1.2 "is enough for everyone." If you don’t use public transport on weekends, multiply by a factor of 0.9, or better, do not multiply by anything: just leave 80 * 30.
So, our man travels on weekends to friends and ultimately spends:
(80 * 30 * 1.2) / 30000 = 0.096 = 9.6% ~ 10%
For lunches he spends:
(150 * 30 * 0.9) / 30000 = 0.135 = 13.5% ~ 14%
Now, from 67% of the remaining budget after deducting daily expenses , 43% remains.
Once a weekend, our humble imaginary friend goes to the grocery store and buys food for 1000 rubles., In addition, another 500 rubles. a week goes to groceries on weekdays.
We have 4.4 weeks in a month. In addition, the coefficient will not hinder for calculations here, but since the period is longer, it can be reduced to 1.1. In fact, you can simply use 4 weeks and a standard ratio of 1.2 (the same as for daily expenses).
So, the products spend per month:
(1500 * 4 * 1.2) / 30000 = 0.24 = 24% Now 19% or 5700 rubles are left
from the budget .
Not a very large amount, but the Motorola C350 should be enough.
1. Calculating your budget is useful. It will be sad only in the first months :)
2. For this, it is not necessary to constantly keep financial records. You can only record your expenses for a week to roughly understand how much you spend and what, as well as how your consumption differs on weekdays and weekends. The main thing is that this week be typical, i.e. without extra days off and without big expenses, in addition, you should not significantly limit yourself in spending.
3. For peace of mind, it’s enough to keep 3-4 numbers in mind: the daily budget on weekdays, the daily budget on weekends, the weekly budget and the rest of the budget after deducting all required expenses (the same 19%). You can limit yourself to the average daily budget and the estimated balance, this, in principle, will be enough.
4. You need to reevaluate your budget whenever your stable regular income grows, as well as when a mandatory spending appears or changes. For prevention, it will not be superfluous to do this once a quarter to catch changes in your expenses on time.
5. Additional income (bonuses, gifts, lottery winnings, etc.) is not necessary in the budget. It’s better to immediately direct them to the target or add to the estimated balance. It is not worth raising your daily / weekly expenses because this changes your consumer habits, and it can be difficult to restore them.
The problem is that not all budgets will make your spending more moderate, your behavior more reasonable, and your financial balance more "positive." The reason here is not only in your consumer habits, but also in how you approach budgeting.
As always, if you approach the issue systematically, the result will be more predictable and enjoyable. And what could be more systemic of the public finance system? And from there we take the main points for the formation of a personal budget.
Thesis 1: Each budget should have a goal.
The question seems to be indisputable (with a goal it’s always better than without it), but few people ask this question before putting the “15%” figure in front of the “Food” column. And in vain. Because it is the goal that should determine opposite which graph to put what figure.
Recently, the federal and regional budgets have always had a social goal. This is partly dictated by the election promises of one person, partly by the low efficiency of other types of budget expenditures, partly by the low level of public debt and large reserves of the national welfare fund and reserve fund. But if we recall the beginning of the 2000s, then the main task of the federal budget was to pay off external debt, which we managed to cope with by the middle of the decade.
Thus, the budget should always have a goal. In the case of personal budgets, the goal should be clear and tangible.
Here are just a few options for budget goals:
- Close credit card
- Celebrate birthday / anniversary / world toilet day (this, by the way, today)
- Buy a new phone (because it has a color screen, 24-voice polyphony, GPRS and a phone book with 100 numbers)
- Play paintball on weekends
- Save up for a car
- Do not get into debt in salary
It would seem that all these goals are very similar. At least by the fact that they offer to postpone part of the funds instead of spending them. Why is it simply impossible to write: “postpone 10, 15, 20, ..., n thousand rubles,” and the rest is already to be written down by cost category? Because it is important not only how much you save, but also what you save.
For example, the first paragraph can be considered as an investment if you give a couple of thousand rubles of interest and / or credit card fees every month. Thus, repayment of debts will allow you to get rid of these monthly useless expenses.
Second point- this is a mandatory one-time waste, i.e. you can’t avoid it, so you will either borrow for a birthday party, or you will learn the basics of Orthodoxy (no hatred) until your next paycheck.
The third point is probably familiar to many. Yes, this is the Motorola C350! But in the context of budgets, this is a waste, which requires 1-3 months to set aside part of their income. Those. not too long-term financial goal. Practice shows that the usefulness of these goals is also often not too “long-term”.
The fourth point is already more interesting. It does not involve large one-time expenses (suppose you already have a "colorful" shotgun), but if you play four times a month, you will end up with a pretty round sum. This is the first reference to the uniformity of costs, which will be discussed below.
Fifth point- This is a very long-term goal. Its usefulness can also be called into question, but it’s important that you want to fulfill it and this will require a very serious organization from you, as well as a long significant limitation in your means. Sounds like a mortgage, huh? This is it :)
The sixth point is the budget in its purest form. Those. The default goal for every budget.
Advice
If you often encounter a situation of lack of funds in the last days before the next income, set yourself goal number 6 first. You should not rush and immediately save up for a new Rolls-Royce Wraith, since the habit of limiting spending should first become a habit, and this can take up to six months or more. The next item should be goal number 1. In general, we will also talk about debts somehow. Further, numbers 2, 4, 5. And if you already passed the mortgage, then you can afford the Motorola C350.
Thesis 2: the budget should be uniform.
Programs for accounting for personal finances practically do not provide the possibility of budgeting funds over time. Although this practically does not allow to achieve the goal under paragraph 4, and most importantly, under paragraph 6. Achieving other goals is also difficult.
Why is it important?
Again, we turn to the state budget system. Often you can hear criticism from the governor, mayor, city manager, etc. in relation to committees, ministries, departments, etc. for low budget execution. And this criticism begins to sound as early as March, when, it would seem, it is still possible to fulfill such a budget that they will criticize for something completely different and completely different people.
The reason is that sovereign men understand that they cannot fulfill the budget over the past two months (jokes about Sochi are welcome) and require a uniform, where possible, disbursement of funds throughout the year. In addition, this simplifies the work of the Treasury, which happens, does not have time to sign payments to everyone at the end of the year, but such problems should not arise with personal finances.
In addition, a uniformly distributed budget allows, as already mentioned, more efficiently achieve goals, because by the end of the month you will not be left with a choice: to eat or pay for a mortgage.
And also it allows you to normalize your consumer behavior. You do not encounter a situation where you are forced to significantly limit your spending for several days, because you have 500 rubles in your pocket until the end of the week. Accordingly, you do not have a deferred demand for pleasure, which you satisfy hypertrophically after receiving income. This means that you sleep normally, eat well, smile like on cliparts and feel good and confident.
How to make the budget even?
To do this, you need to take your income, subtract from them the constant monthly expenses (rent, rent, travel, Internet, gym, etc.) and divide the remaining money by the number of days in a month.
You will get some kind of figure that will be your daily budget. Usually this stage makes you wonder if you need a Motorola C350? If in doubt, take its price, divide by the number of days in a month (or several months, if you save several months) and subtract from the daily budget.
Advice
The daily budget is not a very good indicator due to the instability of daily expenses. As a rule, for many it will be lower than a good trip to the grocery store, but this does not mean that if you gathered for food in the evening, then you will go to work on foot. Therefore, it is better to multiply it by 7 and work with a weekly budget.
Also, keep in mind that your consumer behavior is changing over the weekend. For me, for example, on weekends, my expenses increase three times. This should also be reflected in your budget on weekdays.
PS The simple model described in the framework of the second thesis is based on the Max 4 Kraynov system of the envelope www.4konverta.comand is suitable only for budgeting with stable periodic (usually monthly) earnings. I’ll try to write sometime about budgeting with non-recurring income.
Thesis 3: The budget must be real.
Problems often arise here, especially if you remember about “15%” opposite the column “Food”. As a rule, these figures are taken from the head according to the principle: "I’ll write less - I’ll spend less." Of course, this rule does not extend beyond the head.
The “reality” of the budget in the state system is partly provided by the budget code, which does not allow the formation of a budget with a large deficit. In addition, low execution allows you to have account balances, the regions themselves can, in which case, attract a little "cheap" money from the market, and also during the year to place available funds for a very short period (several tens of days) at a small percentage in banks.
In general, in the budget system there are a bit more instruments for ensuring balance; in the system of personal finances there are only own revenues and calculations. Therefore, specific figures, how many percent are in which category, should be transferred only after you have calculated your daily and weekly budgets.
In addition, these figures are relevant only for those expenses that cannot be attributed to goals, daily and weekly expenses. Because the volume of these costs is usually stable, and at the first stage you better not cut them substantially, but just keep them in mind.
And only after you have set mandatory goals from the budget, stable monthly, weekly and daily expenses, you can take the rest of the budget and distribute it “out of your head” to those joys that are not part of your goals and do not ensure your daily existence. No funds left for "joy"? Welcome to our world! :)
I’ll show the mechanics of calculating my personal budget using an example
Take a person with a monthly salary of 30,000 rubles.
Suppose he pays every month
- 7 500 rub. for renting a room / apartment + rent
- 1 600 rub. for english lessons
- 500 rubles for the Internet
- 400 rubles per phone
Total: 10,000 rubles.
Thus, 33% of the budget goes to stable monthly costs. 67% (20,000 rubles) remains.
If there are no mandatory goals in the coming month, then we can proceed to the calculation of daily and weekly budgets. If there are goals, then they must be subtracted from the remaining 20,000 rubles. and distribute the remainder.
Suppose a person has no mandatory goals, so in November he has 666 rubles per day or 4662 rubles. in Week.
Here you can already take into account the difference in behavior on weekdays and weekends. Suppose, at the weekend, the cost doubles, i.e. the budget on weekdays will be 518 rubles, and on weekends 1036 rubles.
Now for the daily / weekly expenses:
In one working day, our estimated person spends 80 rubles. to travel in transport and 150 rubles. for lunch.
To understand how much this takes up interest in the monthly budget, you need to understand how often do you use public transport on weekends? If so, multiply 80 by 30, plus an additional 1.2. This ratio will provide the "reality" of the budget. For different expenses and for different people, it will be different, but in the general sense, 1.2 "is enough for everyone." If you don’t use public transport on weekends, multiply by a factor of 0.9, or better, do not multiply by anything: just leave 80 * 30.
So, our man travels on weekends to friends and ultimately spends:
(80 * 30 * 1.2) / 30000 = 0.096 = 9.6% ~ 10%
For lunches he spends:
(150 * 30 * 0.9) / 30000 = 0.135 = 13.5% ~ 14%
Now, from 67% of the remaining budget after deducting daily expenses , 43% remains.
Once a weekend, our humble imaginary friend goes to the grocery store and buys food for 1000 rubles., In addition, another 500 rubles. a week goes to groceries on weekdays.
We have 4.4 weeks in a month. In addition, the coefficient will not hinder for calculations here, but since the period is longer, it can be reduced to 1.1. In fact, you can simply use 4 weeks and a standard ratio of 1.2 (the same as for daily expenses).
So, the products spend per month:
(1500 * 4 * 1.2) / 30000 = 0.24 = 24% Now 19% or 5700 rubles are left
from the budget .
Not a very large amount, but the Motorola C350 should be enough.
conclusions
1. Calculating your budget is useful. It will be sad only in the first months :)
2. For this, it is not necessary to constantly keep financial records. You can only record your expenses for a week to roughly understand how much you spend and what, as well as how your consumption differs on weekdays and weekends. The main thing is that this week be typical, i.e. without extra days off and without big expenses, in addition, you should not significantly limit yourself in spending.
3. For peace of mind, it’s enough to keep 3-4 numbers in mind: the daily budget on weekdays, the daily budget on weekends, the weekly budget and the rest of the budget after deducting all required expenses (the same 19%). You can limit yourself to the average daily budget and the estimated balance, this, in principle, will be enough.
4. You need to reevaluate your budget whenever your stable regular income grows, as well as when a mandatory spending appears or changes. For prevention, it will not be superfluous to do this once a quarter to catch changes in your expenses on time.
5. Additional income (bonuses, gifts, lottery winnings, etc.) is not necessary in the budget. It’s better to immediately direct them to the target or add to the estimated balance. It is not worth raising your daily / weekly expenses because this changes your consumer habits, and it can be difficult to restore them.