You’ve probably tried budgeting before. Whether it was passed down from your parents and you maintain a paper balance sheet or a complex Excel model, or you’ve used trendy apps on your iPhone, as a young, or even more mature, adult, you’ve no doubt had some experience with budgeting.

It usually starts out of necessity. You’re earning money, but you don’t know where it’s going. You quickly find yourself living pay check to pay check and it’s time to take stock and understand where your money is going.

We tend to look over our bank statements, take stock of how much we spend on all of the little things, and tally it up to come to a number that makes us go “how do I spend THAT much money every month?”

It’s a necessary start to budgeting that we all have to take, followed closely by the “we have to cut down on xyz” to come to a budget number that seems more realistic. It comes with sacrifices and we go through phases of meal prepping, staying at home, not drinking alcohol and many other creative sacrifices to try and keep within our budget.

And that’s okay.

But it’s also wrong.

Budgeting is deeply personal. And when we start sacrificing who we want to be, stark realities of life take hold; like when those friends we always caught up with for dinner suddenly think we’re cheap or won’t invite us to events anymore…

And it doesn’t have to be like that.

There isn’t a one size fits all approach to budgeting; but we’ve pulled together some ideas that worked for us and we hope it works for you too. Tell us in the comments how you approach budgeting in your own way.

Understand your core values and goals

What makes you happy? Is it spending time with friends and family? Travelling? Being creative? Understand what it is you love doing, your hobbies, the things that you ‘need’ in your life; the non-negotiables. It could be something as simple as enjoying a good coffee, or always having a nice bottle of whisky to sip and share with friends; sharing precious moments with loved ones is a valid core value. It’s part of what drives us, and to put up with working 9-to-5. Core values are not just who we are, but who we want to be. (A short list of example core values can be found at the end of this post.)

It’s important to have an idea of what you want to achieve; and then we can decide how to get there. What is it you want to achieve in life? What are your goals? To quote Simon Sinek’s best seller, “Start with why” – what are your financial and life goals?

Goals can be big or small. Are you saving for a house? Do you want to achieve Financial Independence? Maybe you just want to have enough in the bank to know that if anything happens, you’ll be fine? Here’s some examples to get you started:

Take stock

On a regular basis, usually monthly, it’s important to look back. Ask yourselves these questions:

As part of this review, take note of when your bills get paid and when you typically spend money. No one can account accurately for everything life throws at you, but keeping track will help you understand the impact of when life happens.

Make use of apps like PocketBook, WeMoney or Mint, to automatically import your bank transactions and categorise these. We suggest using these types of apps as a guide to understanding where you spend money. Discover your big spending areas and keep track at a high level.

Most importantly, focus on the positive aspects of your budget this month:

Plan your next month

This is where most of us get budgeting wrong. Be realistic about where you’re going to spend your money. A simple spreadsheet is a good start here. Keep things simple, and ‘don’t sweat the small stuff’.

Example core values

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