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.
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:
- Car, Contents & Health Insurance
- Public Transport
- Debt Minimum Payments
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%
- 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%
Further to this I’ll be using the envelope method for:
- Public Transport,
- Eating Out, and
I even found a pack of envelopes in my spare room so there’s no cost to try this out!