Budgeting

When I moved on my own half a decade ago, one of the hardest tasks for me was to start budgetting properly and actually putting money aside.

Up until yesterday, I was using Homebank to help with that, it’s simple to use, however doesn’t exactly scream at you when you go over budget.

Enters Actual, the new I put in place yesterday after some time of tests. Actual allows you to set a proper budget right away and will show you on the main screen with scary red text when you’re going over anything. Given I often forget about submenus to see stuff like that, that’s perfect for me!

Now the hardest task remains: actually defining the budget. It took me a few years to finally get into a good rhythm because that’s stuff I’ve never been taught anywhere.

What I usually do is add all the essentials (rent, internet, electricity, water) together, plus on top some generous amount for food, then deriving everything from it.

Sounds simple? That’s because it is! Let’s take an example (prices will reflect what is local to me, so might either look outreagous or very cheap). In any case, I made up most of those numbers, so don’t get too angry if you don’t pay exactly that in daily life, this is a demo after all.

Imagine you’re earning 2000€ after tax. Naturally, we’d subtract:

• 740€ for rent.
• 30€ for electricity.
• 75€ for mobile plan + internet.

That’s already 845€ shaved off our wage, 1155€ remaining. Let’s allocate around 350€ for food a month (let’s assume you eat a lot and that the shops are expensive), and now you’re left with about 805€.

At this point the last task is to balance leisure/unplanned expanses and savings. Personally, going about 50/50 has worked great so far. So in this instance, I’d put around 400€ in savings and keep the rest to spend during the month.

Another trick I use is less on the accounting side and more on the psychological side. Before buying anything, I force myself to wait around 24h. I’ve made some pretty bad decisions with impulse buying years ago, and I’m not about to repeat that mistake.

Looking back on my almost 5 years of tracked financial data, I am honestly scared at myself for spending that much money on things that are definitely frivolous. Luckily, nowadays everything’s under control.

In any case, that stuff took me too long to figure out on my own. Hopefully this post will help some that are just moving out.

If not, oh well, I tried.