ļ»æTHE OUTLINE
0:00:00 Introduction to the topic of creating a budget and sticking to it
0:01:30 Defining a budget and its benefits for financial clarity and control
0:03:00 Addressing the emotional challenges women face with budgeting
0:04:30 Overcoming the fear and intimidation of budgeting
0:06:00 Tracking income sources
0:07:30 Conducting an expense audit and categorising spending
0:09:30 Organising expenses into a budget spreadsheet
0:12:00 Incorporating savings and investment goals
0:13:30 Addressing emotional and psychological barriers to budgeting
0:17:00 Creating an engaging money tracker for motivation
0:19:00 Aligning spending with personal values and emotions
0:21:00 Importance of teaching kids about budgeting
0:22:30 Conclusion and call to action
THE ERIN DAVIS SHOW
Welcome to the Erin Davis show where we talk all things money, mindset and confidence. I know that being in control of your money means that you can step into the rest of your life with confidence, because everything starts with confidence. But I also know that women carry a huge, invisible mental load when it comes to their money. Being an accountant for over 30 years, I know all the ins and outs when it comes to money, and just how heavy that emotional load can be. So while I love talking about money, for me, it goes so much deeper. While I want you to explore your relationship with money, I also want to show you how embracing connection, expansion and abundance will make you feel more centred, inspired and aligned. So are you ready? Let's get started.
Hello, Hello, beautiful people. I just wanted to welcome you to another week of the Erin Davis Show. I am so grateful you are here, and today we are going to be talking about how to create a budget and stick to it. I asked a question in my Facebook group, The Confident Money Lounge, what it is that you want to know about, and this was the topic that came up. So today we are going to be talking about all things budget and how we can stick to it. Because it is one thing to create a budget, but it is actually another thing to stick to it, because that's the most important part, right?
We can all create things, but unless you actually take action, then nothing is going to stick. So let's get into it today. What is a budget? Well, strictly speaking, it is just tracking the income that has come in, less your expenses go out now the budget is created like a forecast on what you expect the income to be and what you expect the expenses to be, and it puts it into a format where you can track it either weekly, monthly, annually. Most people tend to track it each month, and that means you can get a budget for the whole 12 months of a year or a calendar year, which you then can compare to actual amounts coming in and out. But it also gives you a really good basis for how to make decisions and just feel in control with your money. Because when we are in control of our money, we're able to make better decisions. We're able to really just step into that space of having more confidence and sleeping better and smiling more, and really just owning that space so the budget, as I said, is really just income coming in, less expenses going out, telling you what you will have left at the end of the month.
Now, a budget can seem pretty scary for a lot of women, in particular, because it deals with numbers. It's a spreadsheet. Usually, well, that's how I tend to do it, on a spreadsheet. But there are different apps and software that you can use to be able to create a budget. But numbers and spreadsheets can be pretty scary, and if you are, you know, really quite engaged in your business, doing well in your business, but numbers are the thing that is letting you down. Then this is something that you need to work on, and a budget is the first step, because once you know your numbers, it makes so much sense for everything else going on in your business and your world.
So the budget, as I said, can be pretty scary because it is talking about numbers, but I don't want that to stop you. I want you to know that you can learn new things and you can embrace hard things and do scary things, and once you create a budget, it actually takes all of the worry and stress out of your head and puts it on paper. Now that's not to say that the budget may look pretty scary, as in what it actually tells you, because we can't change or I can't change that just by creating a budget, but the budget gives you the information, and once you have the information, you are then empowered to be able to make decisions. And that really is where the most empowering position is. Comes from when you have all the information you can make informed decisions. And so that's what a budget is. So don't be scared about it. Don't freak out. Just know that it is really the income coming in, less expenses going out. But once you have created the budget, so, or the way to create a budget, we'll talk about how to create a budget first, and then we'll talk about how we're going to stick to it, because there's really two different parts to this whole thing that we're talking about today.
So how to actually create a budget? The first step is you need to track your income. Now this can be pretty easy, because it is usually the deposits going into your bank account from your wages. Could be investment income, it could be interest received, or it could be business income. So if you're doing this for your business, it is the sales going into your bank account. So you can do a personal budget, and you can also do a business budget, they effectively look at the same thing. It is just income coming in, expenses going out. But just make sure that you keep your business and your personal budget separate, because they really are two separate things. So just make sure that you keep them separate.
We've tracked our income. I would suggest doing an audit on your bank statements for at least a month, maybe even three months, if you can manage it, get your bank statements, print them out and use a highlighter and highlight all of the different categories of expenses that you have. You can break it down between groceries, motor vehicle costs. You could break it further down and get fuel, repairs and maintenance, rego insurance for the vehicles. Or you can just leave it as motor vehicles, the insurance that you pay. So you could have house insurance, contents insurance, your personal income protection, life insurance, those types of things. Then we have utilities, which are council rates, water rates, mortgage repayments, rent, anything that is coming out of your bank account, electricity. We also have stuff, or you also need to account for things like take away kids, sporting activities, school fees, haircuts, you know, all those little things. Maybe you don't need to categorise each little thing separately, but maybe it is kids expenses or mum's expenses, Dad's expenses, however it looks for you, is okay, and don't get too caught up on what it has to look like.
Preparing a budget should be individual, and it should just be something that feels right for you, so you can go quite granular with the expenses, but if you're just starting out, I would suggest keeping it fairly high level and group some of those expenses that make sense together. Maybe the kids have got sporting activities, but there's soccer and netball and swimming and basketball and a few different sports, just put it all together as kids sport, because that will then tell you how much you need to budget to pay for the kids sport for the year. So that's that comes from doing the audit. Once you have the audit and you total up those expenses for those different categories, it's then about putting that information into the spreadsheet. Now, my spreadsheet can sometimes get a little complicated, because I go down a little rabbit hole and try to get a bit too fancy, but that then ends up being a bit too complicated. So I've paired it back, and I have income coming in from my salary, then my husband's, and then I have our investment income, and then I have the expenses listed out, as I just said, electricity, water, Council, insurance, the house costs, the vehicle costs. I break my vehicle's costs down into particular vehicles, so then I can track each vehicle I've got kids sport or kids expenses, and then we pay income protection insurance, so I have that there. And then I end up with a total of the expenses, then I end up with a surplus or a deficit. Now we want it to show a surplus, ideally, because that means we have more money coming in than expenses going out. But if you are in a deficit with this audit that then tells you that you are spending more than what you were bringing. In, and you should find that your bank account is going down or your credit card debt is going up, which is something that we want to identify what is happening.
Then we can make some informed decisions about it. I also then want you to once you have that income and expenses listed, we then want to project it out for the next 12 months. So you can I just keep my budget as in total, total expenses for the year. I break it down, or I bring into account my weekly expenses, fortnightly, monthly, quarterly expenses converted all to weekly. So to do that, if you have an expense that you pay monthly, you times it by 12, divided by 52 and that will give you a weekly expense. If you pay something fortnightly, times it by 26 divided by 52 council rates, for instance, is paid quarterly, so times it by four divided by 52 so you get the idea. Then I end up with a weekly amount for all of that income and all of the expenses.
I can then determine how much I need to transfer into my various accounts to cover those expenses. Now we have a bills account where I know all of my direct debits are coming out of. We also have a spending account. We have savings accounts, and I have set up an automatic investment account. So plus, we have our home loan, it's about then making sure that I have the income split up between the various buckets as such of those expenses, so I know that everything is covered. And I have also included in our budget a savings amount, and like I said, a automatic investment amount, because I want to include that as part of our weekly spending. And while I'm not a financial advisor, I can't advise on where to invest your money. I'm just sharing what it is that I do.
So once we have that, it's then about creating, creating that list of what your income is, less your expenses, and then determining your goals. Now there's a lot of talk around smart goals, and this, I find, doesn't work for a lot of women now this is because those smart goals are very linear. They don't take into account our emotions, our past experiences, our thoughts and our beliefs, particularly around money, but also around ourselves.
If money was very linear and very just transactional, we would create this budget. We would set the goals, and we would stick to it. We would have no questions asked. We would achieve all of these goals within a set period of time, and we would be smashing it however we don't, and this is because we every time we interact with money, we have a belief or a thought or an emotion attached to it, and those things then influence and impact, the way that we spend our money, or the way that we we deal with money, the way that we think about it, the way that we manage it. So for women, it is not linear and it is not transactional. We need to start to remove the emotion that surrounding the money. So then it does just become transactional, but this is why we find it so difficult to actually stick to the budget.
So a past experience with money is that you may have created a budget in the past. You may have created this whiz bang spreadsheet that tells you all the ins and outs, and you have it all set up perfectly, and you're tracking along pretty good. But then all of a sudden you make a mistake, or you have an unexpected bill come in and it just throws the budget out. You then throw your hands in the air, swear and curse and think, What the hell am I doing? Why am I doing this? I can't possibly do this. I am such a failure. I don't even know why I try, because every time I try, I just can't do it. Those thoughts and feelings that you experience in that moment will keep coming up and will keep repeating. Every time you go to do a budget, that fear of failure, that fear of making mistakes, that fear of not getting it right, the fear of I don't know what I'm doing, will play into you self sabotaging the budget that you've just created. So if you want to create a budget and you want to stick to it. It's about addressing those underlying emotions that we have in relation to money.
Now there's a lot of talk about money mindset and a lot of talk about how we need to resolve those issues. The thing is that we need to become aware of them, to start with, like I've spoken about on the podcast before, that awareness is so key. If you want to create change, it's about drawing a line in the sand, recognizing how those thoughts and feelings and emotions are impacting us, and starting to set yourself up for success, celebrate the small wins and really just embrace those small movements forward, because it is those movements that are going to change the actions that you make, actions, thoughts, beliefs, they all work in a cyclical pattern, and for one to improve the other, the other one needs to be improved.
Does that even make sense? I don't know. But if you want better actions, you need better thoughts and you need better beliefs. But to have better thoughts and beliefs, you need better actions. So it all works around swings and roundabouts that when you start to improve one the other one starts to improve as well. So I would suggest creating a budget that is flexible, that allows you to build in some flexibility, so it is not so rigid that it doesn't allow for unexpected things popping up. Because we don't want to self sabotage. We want to create enough room within the budget to allow for these ups and downs that will then keep you on track and moving forward. You also want to be able to review it regularly. It's not just to create a set and forget. It requires you to monitor. It requires you to adjust where needed, and it requires you to be kind to yourself, so that you can really just continue on this path, and the more that you practise, the more that you are kind to yourself, the more that you are embracing the flexibility and the flow, the more you will find that you can stick to this budget and remember We want to we want to make empowered decisions. And so if you are creating this budget, the idea is that you want to get better with money.
So what can you do to be able to set yourself up for success? Create a money tracker which is fun and engaging, that has maybe small, manageable targets that you can colour in. I know that I have a tracker for my running. I have a shoe which is what I colour in, and it's for 1000 kilometres. The satisfaction I get with colouring in each kilometre is like no other. And I sometimes get a bit obsessed with this shoe, because I love colouring it in. It's just the same as when you create a to-do list, but you've already done the task, but you put it on the list so you can cross it off. We want to create a money tracker, which is fun and energising, so that will help you stay on track as well for your money goals, but also make those targets manageable. You don't want to create.
You don't want to create a budget and a goal that is so strict and so limiting that you're just going to set yourself up for failure. So make it very realistic. Be very kind to yourself, and most of all, be honest with yourself. You need to stop with the BS. You need to stop with the fighting expenses or not acknowledging expenses. You know, those money leakages that we have when we go to the shops to pick up three or four things, but we end up walking out with $140 worth of groceries or the snacks that we buy at the petrol station when we're filling up the car. You know, be honest with yourself, because you're not kidding anybody else other than yourself. Yourself, and this is you wanting to improve your financial situation.
So if you want to create a budget and you want to be able to stick to it, you really need to be able to, you really need to be able to create something that is a true representation of where you are right now, but it includes some stretch targets. So if you need some help to create a budget, if you need some help to stay accountable, because accountability is so important, and if you're not strong enough to do that for yourself, let me know, because this is the stuff that I love to do, and it is really about. Don't over complicate things. Don't make your spreadsheet so hard that you freak out. You don't know what it is, you don't know what it means, you don't understand it. And therefore you throw your hands in the air and just go bugger it. I just can't do it.
But then next week, sulk and whinge and carry on to whoever will listen that you have no money and you can't get ahead, and you're in this constant cycle of never having enough. There is enough. It might be tight, but what are your goals? What are your priorities? Where are you spending your money? And then how can you limit those expenses that are not the priority, those wants over the needs? And then how can we generate some more income? So it's really about looking at where the cash is coming and going. That is the budget part. Sticking to it is connecting the emotions to how you feel about your transactions, making sure that those transactions are in alignment with your values and bringing you joy. They're not just the instant gratification like the Uber Eats that you receive, and you know that it's going to taste like shit, but you still order it anyway, because you need it right now. Don't spend the money on that stuff if it doesn't align with your values. If you know that it's going to come and it's going to be cold and it's going to taste like garbage, then you need to really consider why you're purchasing it at the beginning anyway.
So look at where you're spending your money. Is that buying you convenience, and if that's okay, and if it is, that's okay if that's what you need in your life at the moment, if it's buying you support with cleaning the house or mowing the lawns, then that's okay too. This is going to be very individual, just to you and just to your needs, which is totally fine, but make it realistic, make it accurate for what you're actually spending. And then have a look at the emotions that you're attaching to every transaction that involves money. What does it say about you? How does it make you feel? What do you want to feel instead, what do you want to achieve and what? What is it? What will it mean to you if you stick to this budget? Because it is really up to you to create your financial future. If you're not sure what to do, that is where you need to ask for help and you need to ask for support. You don't have to do this all by yourself. There are plenty, plenty of financial educators that can help you to create a budget, but then also stick to it. So if this resonates, let me know, I know that budgeting can be quite scary.
As I said at the very beginning, it involves numbers, and for a lot of women right there. That just is scary stuff, but it doesn't have to be. Now is your time to really start to take control of your numbers. The best part about creating a budget is that you can then teach your kids, and when you teach your kids, particularly your girls, you are empowering them to make financial decisions, become financially independent and financially responsible, so that they grow up knowing how to manage their money, knowing how to spend it, knowing where to spend it, and being in a financial position, which is one where they feel totally in control. So this is why I have created my budget. I have shown my eldest daughter. The other two kids are not really interested just at the moment, however, I'm talking to them. It's part of our everyday conversation. It's very normal to talk about money in our house. We're not making it scary, we're not making it a foreign language. It's part of the conversation. So all of this work that we do around money and the way we behave with money will impact the way our. Our kids see and feel about their money. So you've got this. Let me know if you need some help.
I am here to help as always, but creating a budget and sticking to it is really not that hard, once you know the insider tricks. So if you need some help, reach out. Otherwise, I will chat to you next week.
Thanks for tuning in today. I really hope you enjoyed the show. If you did head over and subscribe and also leave me a review while you're there, I would love to read it. Don't forget to share this episode with your audience and tag me on Instagram at Erin Davis. Underscore, transform. If you need any more info from today's show, head over to Erin davis.com.au. Forward slash podcast, where you'll find all of today's show notes and links. See you next week on the Erin Davis show.
