I had attempted to keep a budget multiple times in my adult life. I would draw up the categories, but wouldn’t follow through with tracking my spending. I’d also make my budget without looking at my previous spending habits over the past few months. In hindsight, it is easy to see why my attempts had failed.
In September 2017, my boyfriend and I had just bought our first house. When we moved in, there were a lot more maintenance costs than we had expected or were identified on our home buyers report. We also went from needing to furnish a small two-bedroom flat to a four-bedroom house. Suddenly, a budget became a necessity, not an option. I began looking online for advice, and that’s how I found TFD. I followed their advice by reviewing my spending over the past three months and then drew up a budget. I completed this for my personal bank account and for our joint account.
I have been surprised how keeping a budget has prompted me to re-evaluate all areas of my life and supported me to make big decisions. Here are five changes that I’ve made since budgeting:
1. Changed Career Tracks
I live in England and work in our wonderful, beautiful National Health Service (NHS), which provides free healthcare to all. I love my job. However, there are some downsides. For example, you cannot negotiate your pay.
Each job role begins on specified salary, and you receive annual increments providing you meet your targets. The increments are around £1,000 ($1,336.50). You cannot negotiate for more pay even if you significantly exceed your targets or go beyond what is expected of your job role. Thus, when reading or listening to TFD discuss negotiating a raise, I knew that that was never an option for me.
I also knew I was being massively underpaid for my role. All qualified therapists start on Band 5. After a year of working, I progressed to a Band 6 role. A week after that, I was asked to accept an acting up role to the Band 7 job. This was to lead a therapy team across the trust, which meant overseeing the therapists who were providing the inpatient and community care across two hospitals. It was an insane proposition. I had dreamt of having such a role one day, but thought it would be at least 10 years into my career. After realizing that I would be made to do the job even if I declined, I spoke to a colleague and we agreed to share the acting-up role. For this new role, I received only one increment.
Budgeting meant that every month, I was writing down my income and considering how it affected my lifestyle choices. I began to consider how the extra increment resulted in me receiving around only £50 ($66.83) extra each month (I ended up spending it all on massages to relax from the new responsibilities).
I realized something: due to the overlaps in the pay of the different “bands” in the NHS, I could work as a Band 7 but only receive the same amount of money as I was as a Band 5. Budgeting forced me to become honest with myself that having more responsibilities without the proper pay increase was not worth it emotionally or financially. It forced me to think laterally about what I could do to increase my income.
Soon a Band 5 job was advertised in another hospital trust, so I applied and got the job. While my gross pay not have changed, I have gained financially (see below), and my stress levels have significantly decreased.
2. Reconsidered My Commute
Budgeting forced me to see the cost of my commute. I was already acutely aware of how driving two hours per day limited my time to do the things I wanted to outside of work, but the money, as stupid as it sounds, affected me in ways I had never seriously considered. I had just accepted that it was a necessary expense. Inputting my numbers every month made me think about how much I could save if I didn’t have a car. It’s also one of the reasons I accepted a job without a pay raise.
In my previous job, I had a car through a lease scheme at work, which cost £298 ($397.93) gross per month. As the car was part of a salary sacrifice scheme, it resulted in me loosing around £200 ($267.06) from my net pay. It also lowered my pension contributions, which is a decision I regret, as my employer matched my pension (bye free money!). I spent £150 ($200.30) per month on gas, and then there were the other costs such as paying for any repairs, having your car washed, buying screen wash, etc.
My new job is in the same city where I live. By changing to work at my closest hospital, I have been able to get rid of my car and all the associated costs! I now cycle to work, resulting in me being over £350 ($467.36) better off every month.
Besides the financial benefits, my commute is shorter, so I now can sleep in longer and get back earlier in the evening. I now have more time to spend to do the things I want to. In addition, my sciatica has massively improved, so I am in less pain (hooray!), and I no longer need to spend money on deep tissue massages (double hooray!).
3. Reevaluated My Hobbies and Interests
Tracking my spending every month made me consider what I valued, which in turn helped when making budget decisions. For example: did I want to spend £20 ($26.71) on going to the cinema? Or would I have as much or more enjoyment spending £1 ($1.34) on the parking at the free Nature Park? If I wanted to buy my boyfriend a gift, what could I cut elsewhere to have more money to play with? My spending became a lot more intentional, even when I wasn’t choosing to cut back. I chose to spend £270 ($360.54) on a camera and associated equipment because I realized how much I would use it and how much I really enjoyed photography.
Writing the list of things I enjoy made me realize that there were some things that I used to enjoy doing but never made time for, such as writing and drawing. I made use of a Skillshare offer, which I became aware of through TFD, and completed a couple of drawing classes. They weren’t anything amazingly technical, and I am definitely not the next Picasso, but it was fun and got me at sketching again.
The changes in how I spend my time haven’t been steered by money — rather, money was just one part of the picture. It was about taking time to decide what makes me happy rather than just following what other people or society tells you will make you happy. I am much happier having an early night followed by an early walk the next morning and taking along my camera for the journey, than having a “wild one” in the evening. That’s okay, and my budget reflects what I enjoy.
4. Started Having More Frank Money Conversations
Setting our budget every month for the joint account has lead my boyfriend and me to have several productive discussions around our future. We’ve discussed our long-term aims regarding retiring, future career goals, and the possibility of part-time working. These long-term aims have helped us structure our short-term and mid-term aims. For example, we agreed that we wanted to pay off our mortgage earlier than 25 years; we are aiming for between 15 to 20 years. And despite family members suggesting we extend our mortgage so that we can have the bathroom redone now, we have chosen to pay cash for all of the work we have done, as well as everything we buy for the house. I don’t judge people who choose to take their extra mortgage money to renovate their property — it just doesn’t fit in with our goal of wanting to retire early. Paying off the mortgage as soon as possible is part of this plan.
I’ve also become more straightforward when discussing the future with others, too. When they ask typical questions like if we’re going to get married, build an extension, or have a baby soon etc., I answer, “No, we want to overpay the mortgage.” Some people are shocked by this answer, but that’s okay; everyone’s choices and priorities are different. I don’t care what other people think of our financial decisions because now that we have had those discussions, I know that our choices make sense for our plans.
5. Gave Myself Permission to Spend
When I first started thinking about budgeting, I kept hearing and reading that budgeting gives you permission to spend. Pffttt!!! I didn’t believe that at all. How could it?
Obviously, I was wrong. For example, when I had started budgeting, I really wanted to buy a birthday card I saw in a charity shop (they’re cheap, usually only £1 ($1.34), and you feel good that you’re giving the money to a worthwhile cause). I was on an extremely tight budget and felt financially strangled. I saw this set of two beautiful vases for sale. I really, really wanted them. We didn’t have much in the house and they were classic vases which I thought we could keep forever.
I told myself “no, I’m on a budget” and began to walk away. But then I thought, “hang on, let’s check the budget,” so I got out my budgeting app. I realized that I could spend the £3 ($4.01) — yes, they were only £3, and I was still having this internal conflict! — out of my “Personal” category. I can’t quite describe the happiness that followed in knowing that, despite my extremely tight budget, I could still buy something beautiful for my home and not feel guilty afterwards when I looked at my bank statement.
This was the moment when I was 100% on board with budgeting. Doing my budget and tracking my spending gave me control. That day, I felt a sense of calm because I knew that everything would be okay.
In summary, setting up a budget takes time and may not be the most exciting task to complete, but it can be an important tool in helping you change your life. I feel a lot more positive about the present and my future — and it all began by budgeting. So, if you haven’t got a budget, what are you waiting for? And if you have, I hope yours helps you make decisions that benefit your life for now and for the future.
Victoria lives in England. She works in healthcare and is hoping to start a PhD soon. She likes running, red wine and trying to restore order to her garden!
Image via Unsplash