A Lesson In Budgeting From Grandad

When I was a little girl, my grandad had a silver teapot hidden in the bottom of his wardrobe and I thought he was very rich.

In reality the silver teapot was made of stainless steel! It housed silver shillings that my grandfather had diligently stashed away to ‘feed’ the gas meter in his London council flat. 

He was in fact far from rich but he did sleep easy at night – he knew that when the meter ran out there was more than one shilling set aside to light the gas which heated his flat and fuelled the stove.

How many of us set money aside before the inevitable bill comes?  I would suggest many of us do not.  The bill comes and if we are lucky and have had a big pay that week, we manage to rake enough money together to pay it.  Lo and behold as soon as that bill is paid, another arrives. 

Somewhere along the track a disaster strikes.  The fridge breaks down.  We may then have to choose between the fridge repair and the car registration.  We pay the repair, the car registration gets paid late, we are hit with a late payment penalty and the downward spiral has begun.

My brother and I are very grateful to my grandad – he was teaching us to budget!  I have budgeted my whole life.  You can budget too. 

I know this because my budget has got me through days as a poor student, many years of backpacking, flatting, saving for our first home, bringing up children, periods of unemployment, high interest rates and our fair share of family traumas, unexpected bills and disasters. 

There are no excuses. 

We can never be sure of what life will deal to us next, but we can be sure that the bills will just keep on coming!  We can be prepared.  We can make a budget.

Budgets come in all styles and forms.  My budget is very simple – I don’t track everything, but I do ensure that I have enough set aside to pay for every bill that comes through the door.

Here’s how it works…
To start, make a list of every bill that arrived last year.  Here I am talking about the bills you can’t avoid; think of them in terms of house bills, insurance bills, motor vehicle bills. 

Then you might want to add some extras that are applicable to you; I have dog registration and an annual pest inspection I like to include in my budget. 

Add them up, divide by 52 to get a weekly amount and add 10% because we all know bills go up!

I know that you will be horrified by the amount, so take some fresh air and go down to the bank to open up a special bank account (think of it as your teapot!). Each week you need to put that weekly amount into this bank account. 

When a bill comes, you pay it from funds accumulated in this bank account.  Write the bill amount down, you will need it to revise the budget figure for next year.

If it’s a struggle to ‘feed your teapot’ then it means you will need to find ways to increase your income or cut your expenditure. 

We’ll talk about that in our next article.