So this med school thing is blowing my mind, particularly around the money stuff.
One of the first things I did was sit down and make a budget. Which sounds easy enough, but I added some extra-detailed personal finance steps for all of you to follow along!
How to make a kick-ass back to school budget
1. Before you even know what the future holds- track your expenses! I call these spending analyses.
For the past year and a half I have been tracking my spending by month- I post them up here and compare my intended spending with my actual costs. This is great for keeping you on track every month with your goals, but very helpful when you need to project a budget for the future.
Because I have a record of all of my expenses I can very easily go back in time and calculate just how much I spend on everything. This is so important for me because I’m going to be adjusting to a drastically cut income (read: no income), but this is also important if you have a dramatic increase in income so you know where that raise is going, or if your life situation changes: parental leave, being self-employed, etc.
2. Put together as many spending analyzes as possible to get the most accurate view of your spending habits.
I used my year end review (link here) and my Q1 of 2014 (link), because these were already averages of my spending for these time periods. If you don’t do year end reviews or quarter reviews- first start!- and second, use all your information you have, maybe its 2 weeks or 3 months, to take an average of what you spend per category
3. Use your spending analysis to determine your average expenses by category.
I already have my monthly, quarterly and yearly analysis broken into categories. I have spoken about this before, but I got these categories from Gail Vaz Oxlade.
Debt repayment: credit card repayment from the start of 2013 and after May 2013 all student loan payments
Savings: my emergency fund, tuition goals and retirement savings
Bills: my personal cell, internet, heat and electricity at my old place, and tenant insurance at my new place (heat was included in my rent as of August 2013)
Housing: mostly rent, but also any house improvements/decorations/furniture
Transportation: ground transportation- car rentals, car2go, public transit
Entertainment: eating out, alcohol, events, etc.
Extra: everything else- clothing, gifts, travel, mostly non-essential things that apparently I love to throw money at
Life: personal care, groceries, medication
These are my numbers:
||Year End 2013
||Year End 2013
This alone was a really good exercise for me. I’m very happy to see that I’ve really reigned in my discretionary spending and really did throw a lot of money towards savings!
This gave me great information as to what I spend and where. I used this as a foundation for my next step, which I will talk about later this week!