Here we are, just a few days left in 2020, and damn will we be glad to say goodbye to this year. Although, the way 2021 is starting doesn’t seem much better. However, here we are. January is the month in which we set goals. And it’s for that reason that I have decided to discuss budget setting with you all today. Please note, this post contains affiliate links.
Now before I even think about starting, I do just want to do a little “heads up” section. This is a personal look at how I will be setting my own budget. While I may suggest things that I am doing, I know that not everyone will see the same results or be able to do the same things. On top of this, I am still learning for myself how to budget. This is something I have always struggled with, and so I am documenting my aims for the year in the hope that this time next year I can update you on my progress.
As I was saying previously, January is actually looking like a great month to save some money if you’re living in the UK. The majority of us are in a full lockdown again, and things don’t look set to change any time soon. Back when I set my goals for 2020, I said I wanted to become more financially stable. Well, I think we can agree 2020 was not the year for that. Between furlough and “oh go on, you deserve a present”, and then wanting to support small and local businesses, savings took a hit and life went on. Which is why I am sitting down today to plan my budget for 2021.
How I Will Be Budgeting
Now I’ve been reading up on the best tips, and one thing that rang true to me was the main message at the start of each post I read.
You can’t plan your budget until you know exactly where your money goes!
With that in mind, I sat down with my bank statements, notebook and pen, and began to take note. Now, as I said, 2020 was not the year for a steady income. Furlough was a scary time, even for someone who lives with their parents and doesn’t have any “real” expenses in that sense. However. I did notice a trend in my spending. And while I was regularly paying off my credit card, every few months I was spending on it again. So that’s where we’ll begin. Expenses.
It took a little bit of playing around, but I eventually found my payslips from 2019, and decided to work my budget off them. While my pay went up a bit in 2020, with furlough and leave etc I found it hard to figure out what my pay was. Plus, if I think I have less then surely I should be able to plan better, right?
Working Out My Expenses
I have my car. That’s one thing that isn’t changing any time soon. Between my PCP payment, my tax and insurance, my car takes 27% of my earnings. That’s before purchasing petrol, which on average costs me approx £45 every 4-5 weeks. I won’t factor in the servicing here, or if there’s any other work needing done. I don’t pay to get the car washed, and would check tyre pressure every 4-5 months at 50p per check so we won’t count that.
Okay so you may remember I upgraded my phone during lockdown. However, that actually was to help me save money? Right now, my phone bill is £21 a month. This is down from the £38 a month until June of this year. Now I only have 2GB of data a month, but it’s very rare I need more than that. Plus, I’m now with Sky Mobile so any time I save data, it rolls over to be used another time! I can’t do anything about this cost just yet, but in another 18 months I might be able to negotiate it down even more. If you’re keeping track, we are now up to approx 29% used.
Now I’m not counting my blogging domain or any blogging subscriptions in here. In fact, I’m hoping to monetise my blog enough in 2021 that I won’t need to budget these in. Instead hopefully they’ll cancel each other out – earnings vs outgoings. If I make a profit? Even better! Also, I am aware that these could be cancelled. I just haven’t brought myself to do that yet. We’ll see what I think by the end of this section…
Amazon Prime £7.99 per month
Audible £7.99 per month
Apple Storage £0.79 per month
Breethe App £11.99 per month
Disney+ originally kindly gifted, however due to renew at full price
Netflix £11.99 per month
Now, looking at this you’re probably thinking “that doesn’t look too bad!” But, that adds up to roughly an extra £40 a month, plus whatever Disney+ is. However, I enjoy having my Audible, and Netflix is a lifesaver during lockdown. And I don’t see myself giving up Disney+ or the Apple Storage. So it might be time to say goodbye to Amazon Prime at £7.99 a month – every little helps when budgeting!
Touched on briefly when I mentioned petrol, there are other expenses I have that aren’t set in stone. Things like hair appointments (average cost of £36 a month), presents to purchase (between £20 and £50 each time), and travelling to visit Rachel would be the main three expenses, and they aren’t going away any time soon. Then, I often take my parents either out for a meal or buy them a takeaway or two each month as a sort-of contribution to the house. As I said earlier, there are blogging expenses that come in too. But just taking these few things into account, I spend approx 43% of my monthly pay on these things right now. And that’s not including the other stuff.
Budgeting Plan for 2021
Now I know that after I spend that 43%, I use another 15% towards paying off my credit card, and then the rest either gets spent on food and treats or clothes or left in the account. That’s kind of scary, but I now know where I stand! Now to start looking properly at my budgeting.
1. Reduce Costs Where Possible
As I mentioned previously, that Amazon Prime subscription can go. And to be honest, so can the Audible one for now. I can listen to free audiobooks on Spotify or BBC Sounds. But I will be keeping the others for now. I followed the advice of Martin Lewis and reduced my phone bill by shopping around, and do the same when it comes to my insurance. As we’re getting closer to the end of my car contract, I am keeping a close eye on the deals they may be offering me. If I can trade in for a new car with a cheaper monthly price then I’ll be there! As for my hair and presents, these are just things that I will have to decide at the time. I love getting my hair coloured, and I like the place I go to. There are cheaper options, but I’ll stick with what I’ve got. Finally, I am looking to change my credit card using a balance fee transfer to reduce the interest I will be paying if I stick with my current provider.
2. Set A Strict Allowance
Looking at my statements, the majority of my money gets spent on online sales. Whether it’s blogging ebooks or guides, or something small from a small business, I can’t seem to help myself. So, in 2021, I am going to start a weekly allowance. When i get paid, I will be deducting everything I need to pay – the monthly standards. I will then divide the rest into 3 – 1 share going towards the credit card, the next into savings, and the last will then be my allowance for the month. Factoring in the number of weeks each month, I’ll then be restricting myself on what I can actually spend each week. Anything left over can go in the pot for the following week!
3. Have A Savings Routine
You know, until 2020 I actually had a decent savings routine on the go. I moved money out weekly into a savings account where it earned a little interest, and I was quite proud of myself for that! If I had stuck to it, I would’ve had my credit card cleared by June of this year. Which is why it’s even more important for me to get back on it! So as I said above, I will be creating a proper savings routine and putting it somewhere I can’t easily access it.
4. Stick With It
I’ve worked this whole post in round figures. I’ve overestimated some costs, and have reduced what I actually earn down to a simple round figure to allow for wiggle room in those months where unexpected expenses show up. But making a plan for budgeting and actually sticking to it are two different things. So my last and most important rule for budgeting for 2021 is to stick with it. I know I’ll have times where I won’t save as much as I want to. Or I won’t pay a certain amount off the card. But I will continue to stick to the budget as long as I can. Falling off the horse doesn’t mean you’ll never ride again, just that you need to get back on that horse as soon as possible to reach your destination!
Are you setting yourself any financial goals for 2021? Or have you ever created a budget and successfully stuck to it? Let me know in the comments below and let’s support each other!