Effective personal finance. Easy way
The idea to write this article arose after reading the recently published article Effective Personal Finance. Level 1 . It sounded very correct thoughts, but it is based on the need to keep financial records, which need to be kept very carefully and constantly, and the analysis should be carried out after the fact, when the money has already been spent. Earlier, I made attempts to conduct finance in this way twice, and the motivation ended in a couple of months.
In this article I will talk about the way of doing finance, which I have been using for a long time. It requires less effort and allows you to quickly assess the (in) efficiency of their spending.
By keeping the budget as described in the article, you can:
At the core is Poor-Man's Budgeting Spreadsheet but with additions that allow you to plan, and not just fit into a fixed budget.
The first step is to calculate income, expenses and set first financial goals.
How much money a month comes at your disposal almost certainly?
Permanent income can be called, for example, salary and income from rental properties. If you are consistently freelance and are confident in monthly income, write it here.
Variable incomes: additional work, interest on a bank account, cashback on the card is not considered.
As an example, let's calculate that there is a salary of 100 thousand rubles, and this is where the permanent income ends.
We calculate the expenses that will inevitably be in each month and the cost of which we know in advance. For example, the following hypothetical list:
In the amount of 34 050.
Subtract from the regular income. Remains 65 950 rubles. for variable costs.
This is the actual budget. We spend it on food, clothing, entertainment, investment in the future.
There are two more things worth saving money each month:
Now we have a monthly balance: income minus expenses and mandatory goals.
In the example being described, 39,570 rubles remain. We divide this amount by the number of days in a month. Tomorrow comes November, it has 30 days.
Total, we get a daily balance of 1319 rubles.
Here usually comes the understanding that going to a cafe costing 1,000 rubles is not a measly 1% of income, but almost the entire daily budget. And if you run into a cafe every other day, this is a third of the budget for the month.
And it can get a little sad. Or maybe even panic. Numbers are austere, but objective. We remain calm, you can live a normal amount, even now it is hard to believe in it.
It's simple. There is a specific figure for each day, you need to fit into it. With this money we buy food, clothes, have fun. At the end of the day, the balance, as well as care in the minus, is transferred to the next days. All that saved by the end of the month - profits.
It remains to discuss how to deal with purchases that are more expensive than the daily balance. There are two simple rules:
If you need to make a purchase more expensive than the daily balance, then first we save it. On conditional jeans for 4,000 rubles with a balance of 1,319 p. can accumulate in 5-7 days.
If a waste is urgent - a tooth aches or an urgent repair of the machine is needed - do not postpone and spend a piece of the reserve fund. We replenish the fund at the end of the month. It is desirable to keep a piece for urgent expenses on the account, from which you can withdraw money at any time. And even under a pillow to keep cash.
15-20 thousand should be enough for the absolute majority of unforeseen problems.
First, if you do not make a purchase right away, then there is a time to think and make an informed decision. Including generally change your mind to buy.
Secondly, this approach will teach to plan purchases in advance. This is a useful skill.
Thirdly, the purchase made in this way will bring much more joy, because substantial efforts have been made to acquire it.
Not accumulated by the end of the month - tolerate until the end of the next. In the negative we do not leave.
Record spending by category.
No need to keep a detailed list and record each item from the check. A dozen or one and a half categories are enough, such as “products”, “household chemicals”, etc.
For expenses that are suspicious of a squandering, have separate categories. For example, taxis, bars / alcohol, cafes / restaurants, buying ready-made food instead of cooking at home. After a couple of months, you can evaluate the spending and cut back. Or switch your attention to other items of expenditure.
Also it makes no sense to count pennies - round up to rubles in a big way. If you do not remember the amount accurate to the ruble - round up to tens or hundreds. There will be a small punishment for not contributing immediately.
If we talk about where and how to save, it is better to do it immediately, at the time of purchase. So do not forget to make a waste and the balance will be in front of your eyes during the purchase - it is easier not to spend on extra "coffee".
A great option is mobile apps. There are many options. For example, Daily Budget (I am not the author of the application).
Of the benefits: the free version is suitable for full use, you can make fixed incomes and expenses, considers the balance of the day, allows you to make random incomes, there is the possibility of analyzing history. That is, in the presence of all the necessary functions. Also, as far as I noticed, the application does not attempt to save the data somewhere to itself on the server, which is also nice.
That's all. We will be in touch!
In this article I will talk about the way of doing finance, which I have been using for a long time. It requires less effort and allows you to quickly assess the (in) efficiency of their spending.
By keeping the budget as described in the article, you can:
- Answer the question “why am I earning well, but at the end of the month I always have zero?”
- Quickly identify and eliminate inefficient waste
- Accumulate reserve capital
- Get close to capital for investment.
At the core is Poor-Man's Budgeting Spreadsheet but with additions that allow you to plan, and not just fit into a fixed budget.
We consider the balance
The first step is to calculate income, expenses and set first financial goals.
Regular income
How much money a month comes at your disposal almost certainly?
Permanent income can be called, for example, salary and income from rental properties. If you are consistently freelance and are confident in monthly income, write it here.
Variable incomes: additional work, interest on a bank account, cashback on the card is not considered.
As an example, let's calculate that there is a salary of 100 thousand rubles, and this is where the permanent income ends.
Fixed costs
We calculate the expenses that will inevitably be in each month and the cost of which we know in advance. For example, the following hypothetical list:
- Mortgage / rental apartments: 25 000
- Utility payments: 2 500
- Sports subscription: 3 000
- Subscription to educational services: 2 500
- Internet: 500
- Mobile communications: 300
- Subscription on music / video services: 250
In the amount of 34 050.
Subtract from the regular income. Remains 65 950 rubles. for variable costs.
This is the actual budget. We spend it on food, clothing, entertainment, investment in the future.
First financial goals
There are two more things worth saving money each month:
- Reserve Fund - it must be required. We postpone at least 10%, and better than 30. For our example, take 30% or 19,785 each month.
- Your dream. For example, on a trip. Take 10% or 6 595.
You have less money than you think.
Now we have a monthly balance: income minus expenses and mandatory goals.
In the example being described, 39,570 rubles remain. We divide this amount by the number of days in a month. Tomorrow comes November, it has 30 days.
Total, we get a daily balance of 1319 rubles.
Here usually comes the understanding that going to a cafe costing 1,000 rubles is not a measly 1% of income, but almost the entire daily budget. And if you run into a cafe every other day, this is a third of the budget for the month.
And it can get a little sad. Or maybe even panic. Numbers are austere, but objective. We remain calm, you can live a normal amount, even now it is hard to believe in it.
How to live with it
It's simple. There is a specific figure for each day, you need to fit into it. With this money we buy food, clothes, have fun. At the end of the day, the balance, as well as care in the minus, is transferred to the next days. All that saved by the end of the month - profits.
It remains to discuss how to deal with purchases that are more expensive than the daily balance. There are two simple rules:
We do not go to minus
If you need to make a purchase more expensive than the daily balance, then first we save it. On conditional jeans for 4,000 rubles with a balance of 1,319 p. can accumulate in 5-7 days.
If a waste is urgent - a tooth aches or an urgent repair of the machine is needed - do not postpone and spend a piece of the reserve fund. We replenish the fund at the end of the month. It is desirable to keep a piece for urgent expenses on the account, from which you can withdraw money at any time. And even under a pillow to keep cash.
15-20 thousand should be enough for the absolute majority of unforeseen problems.
We make large purchases at the end of the month for the accumulated money
First, if you do not make a purchase right away, then there is a time to think and make an informed decision. Including generally change your mind to buy.
Secondly, this approach will teach to plan purchases in advance. This is a useful skill.
Thirdly, the purchase made in this way will bring much more joy, because substantial efforts have been made to acquire it.
Not accumulated by the end of the month - tolerate until the end of the next. In the negative we do not leave.
First results
- The budget has been calculated and all required expenses have been taken into account.
- We are already saving money to the reserve fund (quite a lot)
- We are already saving money for a dream
- We know the balance of the day. He is always in front of his eyes, with every purchase.
- Knowledge of numbers encourages to plan spending and consciously spend.
How to keep history and analyze
Record spending by category.
No need to keep a detailed list and record each item from the check. A dozen or one and a half categories are enough, such as “products”, “household chemicals”, etc.
For expenses that are suspicious of a squandering, have separate categories. For example, taxis, bars / alcohol, cafes / restaurants, buying ready-made food instead of cooking at home. After a couple of months, you can evaluate the spending and cut back. Or switch your attention to other items of expenditure.
Also it makes no sense to count pennies - round up to rubles in a big way. If you do not remember the amount accurate to the ruble - round up to tens or hundreds. There will be a small punishment for not contributing immediately.
If we talk about where and how to save, it is better to do it immediately, at the time of purchase. So do not forget to make a waste and the balance will be in front of your eyes during the purchase - it is easier not to spend on extra "coffee".
A great option is mobile apps. There are many options. For example, Daily Budget (I am not the author of the application).
Of the benefits: the free version is suitable for full use, you can make fixed incomes and expenses, considers the balance of the day, allows you to make random incomes, there is the possibility of analyzing history. That is, in the presence of all the necessary functions. Also, as far as I noticed, the application does not attempt to save the data somewhere to itself on the server, which is also nice.
That's all. We will be in touch!