I've never imposed a formal budget on myself. Primarily because I never had steady income while studying. During PEY, I had a savings goal which is to pay all of my forth year expenses, but no structural beyond that. Overall it's worked well so far.
I do want to create a more formal, as in more structured, budget now that I'm working full time and have a variety of end-uses for the money that I earn. Currently I'm tracking most of my expenses (minus travel and work) and have come up with a framework based on 3 months of data.
End uses:
- Retirement savings
- Mortgage downpayment savings
- Rent
- Food
- Socializing
- Clothing
- Other appearance related things (skincare, makeup, hair)
- Household consumables
- Household non-consumables (eg. furniture, kitchen gear)
- Travel / hobby purchases savings
- ???
One thing that doesn't work for me is having everything in monthly increments. I get that this is common advice since most expenses get paid monthly, but other spending categories are more volatile and it seems too contrived to fit them into monthly increments. Prime example of this is clothing spending for me. During the months that I buy clothing items, it very much throws off my budget: currently I have a rough $500 monthly spending limit, and in February I got my Jensens for $280, which are up 56%. Example #2 is travel, which isn't even part of that $500. Although I plan my travels down to minute details (to the point of looking up the menu of restaurants that I'm interested in and estimating my meal costs), I don't set a limit for how much the trip will cost. I don't advocate for this approach in general, but it works well for me. All this rambling is to say that I categorize my expenses into different timescales. I also set fixed amounts for things and percentage amounts for other things. All in all, a messy way to do things, but I'll take that over contrived.
Monthly expenses:
- Rent (fixed - max 1.5k, or I go live at home...)
- Groceries & eating out (fixed, right now it's $200, but I suspect it'll be higher back in Toronto)
- Socializing expenses (fixed)
- Savings for mortgage downpayment (% - 30 to 45)
- Savings for retirement (% - goal is 6% RRSP and 10% TSFA)
Annual expenses:
- Clothing (fixed)
- Skincare / makeup / hair (fixed - $800? based on some itemized guesses)
All the remaining non-accounted for end uses...I won't set a limit for. Whatever money I have leftover will be used for those. I've found out that I don't actually have the enthusiasm to fully optimize my finances, so this is my 20% effort for 80% results.
...
In other resolutions news:
- I was about to fit all of my April non-organic trash (and recyclables sadly) into the bin! The biggest offenders (by volume) is food containers, especially take-out containers. I don't exactly want to bring my own tupperware to restaurants, so here's hoping some legislation will require all take-out containers to be compostable...or reusable like my beloved deli tubs.
- Still on track for my clothing goals: 5/10 new purchases, none fast fashion (well the scarf, fine), and recording wear counts
- My hair is much improved, I now know to focus on hydration since my hair is coarse and thick. Jeff said that the difference is quite drastic.
- Did actually catch up with a bunch of friends in April, although have not been following my guidelines.
- Revising my professional credibility goal to just studying for my law & ethics exam in the latter half of the year
- Been to a couple of networking events, feels awkward af but was enjoyable as well.
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