New Budget Strategy – Actually Having One!

The thing that I’ve always struggled with when trying to budget is having set amounts aside for all these tiny sections of a ‘traditional’ budget. Then I came cross this post on Get Rich Slowly, called Budgeting for Non-Budgeters: The 60% Solution. It links to an article on MSN Money where Richard Jenkins explains the concept in some detail.

As November is a magical month with 3 pay periods I feel it’s a good time to test this out and tweak it to suit my situation, especially before I move over to monthly pay in December.

Tax is taken out of my pay before I get it, and my superannuation (a total of 10% now I added the extra 1% due to the pay rise) is pre-tax. I’ve fashioned my new budget on net salary for this reason rather than gross as outlined in the article.

Part 1

My budget breaks down like so:

• Superannuation - 10% of my gross salary
• Tax - 28% of what’s left after that

This gives me my 100% take home pay, which is broken down into:

Everyday Expenses

• Rent
• Electricity
• Car, Contents & Health Insurance
• Phone
• Petrol
• Public Transport
• Debt Minimum Payments
• Food
• Charity

These total 75% of my take home pay

Long Term Saving/Debt Reduction

• Debt Snowball
• Baby Emergency Fund

These total 18%

Short Term Savings

• Holidays, Gifts etc

This is 2%

Fun Money

• This is for me to spend on whatever I like, such as getting my nails done, haircuts, going out, general fun stuff

This is 5% for a total of 100%

Part 2

Further to this I’ll be using the envelope method for:

• Petrol
• Public Transport,
• Food,
• Eating Out, and
• Personal

I even found a pack of envelopes in my spare room so there’s no cost to try this out!