Even though this has nothing to do with teaching, I thought this could come in handy.
Before we start, there is one thing you might want to consider:
Get rid of your credit card and switch to using cash only. I know that it might be difficult in some countries, but I still recommend using cash whenever it’s possible. Why? There is no scientific proof, this is just my personal belief, but I really think that cards make us spend more (especially credit ones!). Seeing how the amount of banknotes and coins is getting less day by day makes you more cautious and thoughtful when it comes to spending money, which is extremely important if you want to save as much as you can. The more tangible something is the more difficult it is to let it go.
Buy a notepad you are going to use for writing down your expenses. Spend three months writing down literally every pence/cent/yen/whatever you spend. Make sure to always ask for a receipt – this will make your task much easier. If no receipt is available for some reason, make sure you write down how much you just paid straight away without putting it off for later.
After you have finished your probation period, it is time to make some calculations. These are the numbers you will need:
- The average amount you spend on food per month (be it eating out or doing grocery shopping)
- The average amount you spend on rent and bills (gas, electricity, water, internet, phone service)
- The average amount you spend on commuting (train/bus tickets or petrol)
- If you have any regular monthly appointments (e.g. language classes, counselling sessions, beauty treatment, etc.) add them too.
- Next, put aside a fixed extra amount for unexpected expenses (e.g. a night out with friends, carwash, a new pair of shoes instead of those that fell apart while you were walking, etc.). This will depend on your salary – decide how much you can afford.
- Finally, since living on a tight budget might be somewhat depressing (especially at the beginning), think through how you want to cheer yourself up. Would it be a delicious dessert you eat every Sunday? Or a new aromatic candle you get at the end of the month? Or something else? The key is that you have to plan these little treats and make sure their cost is already included in your monthly budget. If you do not wish – or cannot afford – to spend money on this then you can ignore this step.
- Add all the amounts above. The number you get at the end is your fixed monthly budget.
- Now, as soon as you get your monthly salary, divide it into two halves: the fixed monthly budget and the rest. The rest should stay in your bank account, and the fixed monthly budget should be converted into cash.
- You UNDER NO CIRCUMSTANCES CAN GO OVER the limit aka your fixed monthly budget. If you go over it then you were not careful enough when spending money. You have to develop a new mindset. Your will has to be as strong as it has never been before; resist the temptation to buy everything you lay your eyes on, even if it is just a cup of Starbucks coffee – unless you have classified it as your monthly treat (because in this case it is already included in your monthly expenses!). No one said it would be easy, but everything is possible (the impossible just needs more time to be done).
- If you systematically go over the monthly budget you can consider making it slightly bigger but keep in mind that the amount you save each month will become less. Make your choice.
- If you receive any kind of bonuses at work, leave them in your bank account. They should be added to your savings.
- At the end of each budget month, make the following calculations:
- Assets (= how much money you had when the budget month started)
- Leftovers become the first part of your monthly budget for the next month. The rest of the amount should be taken from your monthly salary.
- The more you have left at the end of each month the less you need to take from your monthly salary, i.e. the more stays in your account.
- Gradually, you will start noticing the numbers in your bank account going up. Congrats, you have started saving money!
I hope you will find this useful!