Thursday, July 7, 2016

Saving Your Money Like A Pro!

Saving money is hard.

Whether you need a new laptop, to pay down your loans, or you're saving for a down payment, the task of putting away money each and every week is daunting. 

And let's face it, so many of us are just BAD at it.

Today, I'm going to talk about a tool I've been using since I was 18 to help me save. It's evolved over the years as my life has gained more expenses, but at it's core it's pretty much the same.

I'm going to talk about "The Spreadsheet".

Before I break down the spreadsheet, I want to preface this post by saying that another tool I use to help me save is a Savings Account that I CAN'T access from my debit cards. 

Essentially: Once cash goes IN, I pretend it doesn't exist anymore.

This account is my "rainy day fund" it's where I put all my savings until they grow to the point where I can invest them, or put them into a Tax Free Savings Account. 

OK, back to the spreadsheet! If you'd rather follow along with an actual copy I've included a link at the bottom of this post to a sample you can download and edit for your needs!

If you manage it right (I update mine every 2 days) you can keep watch on how your spending today is impacting your ability to save.

Pro Tip: Keep it in Google Drive or a similar place so that you can easily access it from all your devices! That way if you're out for lunch you can keep a watch on your spending.

The Spreadsheet has 6 basic areas for you to fill in to track your savings:

1) Inputs (Cash Coming In)

The rows in the spreadsheet are organized by my pay dates, to keep track of when money is coming in so that I can organize my bills and payments accordingly.

I track two different inputs:  "Work Income", which is from my 9-5 job and "Other Income" which can be gifted money, money earned from the Blog, tax returns, etc. I total it up in the final column so I know just how much I have to work with every 2 weeks.

2) Credit Card

I have never missed a Credit Card payment. Ever. This spreadsheet is 100% the reason for that.

Start by breaking down how many pay days go into each credit period (ex: you owe the amount by the 10th of the following month). Let's say there are 2 pay periods, take what you owe (or the most you can afford!) and divide across those weeks.

This might be 50/50 or 90/10 depending on your cash flow. Some months you might get 3 pay periods to divide the amount across. The important thing is to update the spreadsheet frequently, it's a LOT easier to see if you're getting yourself into credit trouble when it's laid out in front of you.

Tally what you owe, what you've paid and what is remaining week by week.

3) Bills/Expenses

As Lunch Money Lewis once sang... "I got BILLS I gotta Pay! So I'm gonna work work work every day!"... It's a cheesy rhyme, but he's got a point. If we didn't have bills and expenses, we'd all have passion jobs.

Section 3 is all about managing those bills and expenses. It takes your pay day periods and lets you divide up your payments more evenly so that you don't end up paying everything on the first of the month.

As I've gotten older, I've added more and more columns to this section. Rent, internet, car, insurance... I'm sure I will add more before I'm through. Work to figure out your monthly payment schedule for each (ex: internet and car payements due on the 10th, phone on the 22nd, rent on the 1st!) then add it to the schedule in a way that spreads the payments out. 

Don't forget to include weekly items like grocery money!


AH! Savings! The reason we're doing all of this!

Saving money is hard. Some weeks my expenses won't allow for it, other weeks I can put away more than half my paycheck. Using the spreadsheet allows me to PLAN my savings by seeing exactly where my money is going, and figuring out how much wiggle room I have.

By keeping my eye on the final column (we'll get there) that outlines my personal cash, I can move as much as possible into my untouchable savings account that I mentioned way up at the beginning of this post.

Depending on your expenses, this could be a little bit of money or a lot. My tip is to try to move something into savings every week. Even just $100 each pay period will add up before you know it, plus it ensures you have a safety net JUST in case.

5) Leftover + Cash Debits

Do you have cash leftover in your account from the previous pay period? Add that amount to your "leftover" column! Even if it's only pennies it will help you balance your books properly AND help you better plan your payments for the week.

Also, if you take any cash out of your account, add it to the "cash debits" column. Personally I don't like to work with cash in hand, once it's out of my bank account it exists to be spent. I am a FIRM believer in using cash over credit, but this spreadsheet is really to track what you have in the bank. Add cash debits to the spreadsheet then spend as responsibly as you like!

6) Remaining

My favourite column in the spreadsheet, the remaining amount, your FUN MONEY!

This is your spending money, what is left after budgeting your payments and bills and expenses and savings. You can save it, spend it, whatever it's all yours! But it's all you've got.

This lovely amount is calculated as such:

Fun Money = Income - Credit Card Payment - Bills & Expenses - Savings + Leftovers - Cash

I like to tally this amount all the way down to the bottom of my spreadsheet, if you look at the linked file you can see how much "Fun Money" I start with before my Credit Card and Savings kick in.

That's it! ... Well okay that's a long post but I swear it's worth it.

Some other organizational bits about the spreadsheet, I have row at the top where I show all previous year's info and two rows at the bottom: one to calculate my whole year, and one to calculate the year PLUS the previous info so I can keep a running tally on all my spending...

I also have a "plus or Minus Extras" column which allows me to track unaccounted for items, like needing to dip into my savings due to some rainy-day issue.

After nearly a decade this spreadsheet tells the financial story of my life. I can actually SEE rises and falls for birthdays, vacations, know to the week when I got a pay raise, and watch the struggle of paying off holiday debt. It's fascinating.

I hope you enjoyed my money saving tip post. I'm always interested to learn about people's systems for saving cash so please comment below on your favourite technique!

Happy Saving!