Friday’s Five: Sticking to a Budget

In response to Ibhog’s urjunt (urgent) request, here is my five step plan to saving and budgeting.

Step 1:  Monitor your spending for a month or two; write everything you spend and keep receipt.  At the end of the month you can basically figure out where your money is going.  Walk around with a notebook if you have to, or just keep a list on your phone.

Step 2:  Decide on what are essentials for you and what are the things you can live without.  Transportation money for example is usually a must, but your daily sandwich at The Bakery doesn’t have to be.  Once you have decided on the essentials divide them into categories like transportation, groceries, going out/fun, clothes, etc.  Run to the nearest bookstore and buy yourself some envelopes.  Mark each envelope with the category and allocated budget for it.  After monitoring your spending you should be able to come up with how much you spend in each category and decide where you want and can cut back. If you don’t want to use envelopes use a spreadsheet or a notebook (useful if you don’t want to withdraw your salary from the bank). Now fill up those envelopes.

Step 3: At the end of the month check out the envelopes, see where you spent more and where you spent less. Revise your budget and start again.

Step 4: Get rid of any credit cards you might have. Credit cards are a trap.

Step 5: Keep any money that you have managed to save out of reach. Buy gold coins, save it with your mom or open a savings account without getting an ATM card for it (standing in a queue in a bank should discourage you from spending).

Bonus tip: Learn how to cook. It is healthier and cheaper than eating out, it can also be lots of fun.

10 Comments

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    • At 2009.10.10 13:37, Amira AK said:

      Learning how to cook is definitely healthier, but – maybe it’s because i’m just learning – i’ve been spending tons of money lately on cooking. i’m experimenting and trying out different recipes and innovating and substituting ingredients for others… the supermarket has suddenly become my favourite hangout 😀 Maybe it’s just beginner’s craze. it’ll die out soon :))

      • At 2009.10.10 21:24, jessyz said:

        It usually is expensive at the beginning because you also need to buy lots of equipment (like pans and pots) but after a while it gets cheaper.

        • At 2009.10.10 17:11, ibhog said:

          thanks for the insights :)

          • At 2009.10.10 21:25, jessyz said:

            I hope you find it useful. It took some time to learn and implement it, but I think it works most of the time.

            • At 2009.10.10 19:15, asoom said:

              Staying within a budget has always been a struggle for me. I get lazy about “keeping track”, it’s just one more thing on my list of things to do. My new method is just to try to always use cash because it keeps more conscious about spending money on all those little things. Another thing is I don’t go to the mall spontaneous and unplanned because I know that I don’t leave a mall with either of my hands empty. I have only been to the mall one time since the end of summer and it was because I really needed an eyeshadow brush replacement. Of course I ended up leaving with 2 full hands when I saw all the deals around me, but that was literally one mall trip in 3 months.

              Great tips! you know I’ve what I’ve observed? I think it’s a myth that you save money when you cook. That is just not the case with me. Everytime I wanna cook a meal I have to go shopping for at least a couple of ingredient that I don’t have and I found that overall it would have been the same if I just go out to eat. I end up spending the same. Basically I cook to be healthy, not to save money. Maybe it’s because I only cook for 1 or 2 people, if I was cooking for a whole family than the saving would be more tangible.

              • At 2009.10.10 21:27, jessyz said:

                Yes staying within a budget is always hard, but everything with practice eventually becomes normal and easier. About the cooking, I also sometimes thought so too, but if you compare the same meal (which is usually made from better quality ingredients at home) you will find that it is cheaper.

                • At 2009.10.11 20:53, ze2red said:

                  NICEEEEEE 😉

                  i remember my teacher taught me those steps when i was in KSA, but i never implemented them. maybe because i have this subconscious belief that if i knew where exactly my money is going haz3al 😀

                  anyways thanks for the tips, sure they will become handy someday :)

                  • At 2009.10.15 08:45, jessyz said:

                    Hahahah true true ana kaman baz3al but it was the only way to get more organized. At first I thought because I am the mentally organized type I could handle this in my head. True, I could recall most of where the money went because I am also the type of person who keeps receipts but the truth was I would always overspend in one place without really noticing.

                    • […] use the old fashioned tried and tested envelope method to keep our monthly finances in order.  Only problem was that the envelopes get pretty scruffy […]