Budgeting - The Poor Mans Way: Part1 - Prioritising Your Spending

Over the course of a few Blog posts I hope to discuss with fellow teenagers, students and other folk alike, about the topic of budgeting. It is something that the best of us have to do, whether it be monthly bills, taxes, the food shopping or holiday planning, it something that we will all come across. Many think of it as a chore, but to really get the best result you have to be patient and enjoy it, as well as being productive and methodical.

Now if you haven't got a very mathematical brain, like many others, yo should not be put off by this post, or anything to do with your finances. It is the core of anything in life, as unfortunate as it is to say, and you must understand it and embrace if you are going to succeed.

Please note as well I am aiming these articles on people who are at school or at university, and have other people who support them as much as they need to support themselves, but there is plenty in these to use and implement into your lives, whatever your situation.

The important thing to think about is the fact that you can only spend as much money as you have. For example, you receive a termly student loan payment of £1000. You only have that much money to spend. Just because your overall loan is £3000, it doesn't mean you can spend it all at once. This is something which will catch everybody out and has caught me out too on more than one occasion.

The best place to start with sorting out your budgeting is to take out all the monthly payments and termly payments, such as your accommodation  rent, phone bills etc. that you know you will spend. Once you have done this, you have a ball part figure of how much you have to spend. Now in this you need to find money for all of your other bits and pieces, including food, clothes, going out, presents, holidays, train and bus fares to list but a few. The worrying thing can often be how little money you have.

The next bit is about making sure you can afford everything, no matter how little money you have. You need to prioritise the expenditure that you have. So is that extra night out a week really affordable? Can you really use the posh shampoo in as much quantities as you do or should you settle for the own-brand and use in small amounts? Can you afford to buy a Subway every day for your lunch or would it be cheaper to buy in the ingredients and make yourself up some sandwiches? Is that weekend away to the lake district really worth it, baring in mind the cost of the hotel, travel prices and food when you are there, not to mention the drinking that might take place?

I will show you my 'tree' of spending and you can see an example of this prioritisation of expenditure in action.

Starting at the bottom is all my monthly payments:   

-Phone Bill

-Accommodation

++

-Food

-Petrol Money

++

-Bought lunches

-Drinks out

++

In amongst this I run and maintain a classic car, and this is what I spend my extra money on, like a hobby, as you may spend your extra money on online gaming. This is the last priority and often the thing that I do on the night before pay day is doing a bit of online shopping for a new set of hub caps or some new seat trims, so that I know I will definitely have the money to spend, and it also acts a reward almost for budgetting well that month. I know if I have no money left to spend then I have gone wrong somewhere and feel a tiny bit guilt for that week of have coke in the fridge to drink when I got in, because it was on offer in the Co-op. I didn't really need it and in the end spent about £20 more than I should have done that month which meant that I didn't have the money at the end of the month to buy what I wanted to buy for my car.

And it is that line of thinking which should be at the core of what you are budgetting for. How important are all of my expenditures, and if so, which of my monthly expenditures are neccessary or not. For example, if the shop is only a 5 minute walk away, do I really need to drive, spend about £10 a month more in petrol, or can I use that money to spend on a night out, so for 2 MacDonalds lunches a month?

You should be constantly evaluating how important that handing over of cash is, whether you really need a £4 meal deal on your break at work or whether some toast and a glass of water would be ok, from the out of date cupboard in the canteen, which is then free, not a nice granted, but just as good and probably a little more healthy.

We will go into more detail about food and things in the next part, I hope this has been useful to you and I hope that you have many successes with your financial planning.

Thanks for reading.

Follow me on twitter: @peachy146

                                                                                          

The Classic Schoolboy Salesman

So I am going to talk you through my best money making scheme at school and tell you what I learned in doing so. Learn from my experience. I got quite into it. I even had an internet payong system set up at 1 point!

So I noticed all the deals going on in the local paper shop and convenience store right by my bus stop. I thought: 'If these companies can sell stuff off so low, there must be a reason why they sell them normally so high.' So I went away and did the maths. It didn't take long. If you can sell 4 mars bars for £1 but sell them singularly for 63p, then something has gone astray. I worked out I could sell a mars bar for 50p, undercutting the shops and making a 100% cut for myself!

So there it started. I bought some and asked guys at school if they wanted to buy. They got snapped up quicker than I could manage and by the end of the week I could buy 4 or 5 packs and sell them all. With a £1 profit per pack this was pretty alright. But of course, little shops sell out fairly quickly. So I had to use a bit of imagination. I realised I couldn't keep the same brands on all the time. I would have to be resourceful.

So I had to look around. Maybe the haribo were on a buy one get one free, or maybe the cans of pop. This is where you should look. Anything that you might be able yo split up and sell. Let me tell you if your mates csn walk into the same shop and buy something for a cheaper price you have lost your sales. You need to hndercut the shops. And the only way to do that is to buy on offer and sell off the offer. Simple.

So I continued buying stock every day. Maybe £4-5 every morning! This was a real slog to get it all into my school bag. I also had to face the disapproval of mum and dad. So everything was bought and sold on the same day. Simple. Nothing went over the threshold of my own house.

It was tricky to do. It taught me a few great lessons. Number one. Being resourceful and creative. Number 2. Judging exactly right. You get to know what your customers want after a while. One of my friends could do kit kats for 40p. There was no way I could do that. So I didn't bother with them. And I knew that if I bought in some pepsi, one of my friends may snatch 4 or 5 cans,  so I could afford to get 2 6 pscks and would be able to sell almost all of them in a day. It was a great lesson to me, about what people wanted and didn't want. And about how people think about money and savings. If someone can buy 1 can for say 63p and 4 for £2, every mug will go for the 4 can option. Even though they may drink 4 in the same day as they would just 1, and therefore they have spent more money, they feel like they have got better value.

And that is how a large majority of people think. They buy in bulk because it is better value and not cheaper overall. The 63p can would have meant people spend £1.37 a day than if they bought 4. Just be aware of how people think about what they are spending and propagate your money tree.

Recently I've Been...

So me and my friend enjoy watching a certain YouTube gaming channel by the name of YogsCast. Some of you may have heard of them. Well if you haven't then you should have.

Every now and again we have a bit of a chat about it and get all too excited. This instance happened to be on a walk down to the local shop to get a drink. As it usually is to be honest with you. We were chatting and it inspired me to write a post about it. I have to say it is one of my real enjoyments, guiltily, to play Minecraft  A little 8 bit game, with no goals apart from to dig up dirt and other resources and build stuff out of it. It's that simple. But because it is that simple the possibilities are endless.

Now I am a mega-fan of the whole gaining wealth and dreaming about money. Subsequently these kind of games that involve building your riches really appeal to me. So Minecraft is a big tick. Now one of the other games which they have just started playing based on it's latest release is Sim City.

Now this game is amazing. In my personal opinion, I may go as far as to say the best game in the world! It just appeals to me so much. Now upon telling this to my other friend, not the one I went to the shop with, but a different one, he said the only the aliens and zombies are good in SimCity. That's to say he is no longer my friend (joking of course).

I disagree with that strongly. I don't really know what it is about it that I enjoy so much. I think it is the excitement of building such great wealth and power maybe? I really do feel the thrill as you start to imagine all the things you can do and build and buy and go absolutely mental with it.

That kind of thing really fires me up I suppose. Like the idea of a growing business empire. So there I have said it. I have told the internet. I am a materialist pig.

Apart from it's not the thought of what I could spend the money on. The lottery really doesn't fuss me. You could put £1 million in front of me and tell me to go and by myself I really nice house and car. Obviously I would take it and do it, but it would be nowhere near as exciting as if you said here is £1 million pounds. Go and turn it into 10. I think it is the creativity and thought which you have to put into little entrepreneurial things that are really exciting. It's almost as if it is the challenge of making money that is what is exciting.