Budgeting Revisited

Budgeting: an additional concept to use in your budgeting and help to control your spending. I encourage you to read the original post as this article follows directly on.

Budgeting from the beginning


One of the first articles I ever wrote when I started this blog was on how I budget. I wrote it because it seems clear to me that the key to building wealth is increasing income and controlling spending. I control my spending by making sure that I record each transaction that I make. As I outlined in the original post I categorise my spending so that at the end of each month I can identify in what areas I am overspending.

Budgeting accruals


Since I started accountancy I've been made aware of the accruals concept. This is an important idea in accountancy that states that any income or expenditure should be recorded when they occur and not when the associated cash comes in or goes out.

I use the accruals concept when recording my income and spending. For example, I pay rent on the 10th of each month. This cost of 'living' is clearly spread over the month. However, I record the full amount for the transaction as soon as the money leaves my account. That way I know not to spend money that I don't have.

It's a simple tip: don't spend money that you don't have. Do this by recording and taking note of the money coming out of your account as soon as it occurs.


What do you think of the accruals concept being used to help to budget?

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Multi-Millionaire Road Plan Review (3)

Note: this post is a reminder of my progress as of March 2013

Blueprints:
This post details what I have achieved so far. This article has a lot of links to other articles I have written to demonstrate how the articles interlink to form my plan. Think of these sorts of articles as review and the blueprints to my Multi-Millionaire Road Plan. Feel free to compare to my previous report:

Multi-Millionaire Road End of Year Report:

I wish to extend a big thank you to all my readers. Without your readership, comments, tweets and following I would not find the motivation to keep posting. I hope you will continue to find this site interesting.

Picture from freedigitalphotos
As of September I am no longer a student. I am now able to save roughly 20% of my monthly net (net of tax and pensions) income. This is around £340. £135 goes into a pension scheme each months that is matched by my employer in full. This money is taken directly from my current account into a monthly saver earning a meagre 3.5%. At the end of my financial year (July for me - I have time to sort out my financial matters) I will transfer the total sum into a trader account to buy more undervalued and dividend paying stocks and shares when the time is right.Sometimes I am able to save more through frugal living, careful buying and budgeting.

My current share portfolio is doing much better than when last I wrote about it. The FTSE100, for example currently sits at about 5900 points. As the Fiscal Cliff nears its end, things are looking good for the years ahead in the markets.

If you take a look back at an article back in March, I gave my current financial breakdown. I now wish to update my current asset holdings:

  • £7,466 - Investors Portfolio Fund ICVC - Adventurous
  • £975 - Sits in cash as a deposit for the flat I currently rent
  • £3443.39 - Current Account
  • £752.79 - Monthly Savings Account
  • £5073.48 - Everyday Savings Account
  • £2803.63 - Loyalty Reward ISA
  • £100 - UK Premium Bonds
  • £5483.8 - Online Shares
  • Net Worth: £26,098.09
As you can see my net worth has increased over the last 7 months by £3,465.13. This is a growth of over 15%. This is actually much fast than I had anticipated. I was intending to grow my net worth by about £4,000 per year for the next three years. It looks like I will be surpassing this quite easily in the next few months, assuming nothing drastic changes in the markets.

Originally I wrote a post on a Get Rich Plan and am currently in the middle of implementation. Whilst I have a long way to go, I am currently laying the foundations of this plan. I will now go through each section, briefly:

  1. Frugality - In my last review I mentioned about switching to a cheaper super market. Unfortunately, now that I am living in London and am totally independent, I now shop at Morrisons. This has resulted in an increase in my food budget each month. I now spend about £150 a month on food, even with a 10% staff discount card.
  2. Budgeting - all going according to plan. My method allows me to ascertain where I may be spending too much.
  3. Saving - I am able to save 20% and above of my monthly net income. I didn't get a chance to switch bank accounts. However, I really should consider it at some point in an effort to get a better interest rate, especially now that there is a lot more money going through the account.
  4. Debt - Although I have two credit cards, I have no debt. I pay them off in full each month. I have one credit card which gives 3% cashback (up to a maximum of £100 a year) and another that gives 0.5% cashback. Read my article to explain how to maximise the cashback on credit cards.
  5. Housing - I currently rent accommodation in London. Rent sits at £690 per month, not including bills. This seems rather high. In the summer when this tenancy agreement is up I hope to find cheaper accomodation. For more information on my ideas on Housing read my article: Renting Vs Buying
  6. Investing - on the whole this area of my personal share portfolio is going well. The recent stockmarket dips have affected my portfolio but nothing of major concern at the moment. In 22 months investing I have grown my portfolio by about 14%, ahead of the market average (6% growth in the last 12 months).
  7. Tax - I need to top up my tax free ISAs before April. I am hoping to invest in a product similar to last time that gave me 10.5% growth.
  8. Job - my job is all lined up next year with an above national average pay at (£27,150). Living as a young professional living in London has huge opportunities for networking but of course is highly expensive.
  9. Time and Patience - Time is...going...slowly but surely
  10. Self-belief - check. I will make it
As you can see, on the whole things are looking good. There is much work to be done but at 23, I have time on my side.

I would encourage all of you to do your own financial plan end of year report. It helps you clarify what you have to do and where you are going.

What's going on in your end of year review?

Do you like what you've read? Tell your friends by sharing it with one of the buttons below. Please post this to Facebook or Tweet it to help your friends and family. Feel free to send me an email (mrmoneybanks<at>multimillionaireroad<dot>com), find me on twitter @millionairer0ad or comment. Whether good or bad, I want to hear from you all.

Disclaimer

Information on this site is not appropriate for the purposes of making a decision for carrying out a transaction or trade nor does it provide any form of advice (investment, tax or legal) amounting to investment advice, or make any recommendations regarding particular financial instruments, investments, or products.
Always seek advice of a competent financial advisor with any questions you may have regarding a financial matter