During your PhD, you certainly aren’t bathing in luxury. Even if you have funding for your research, and are paid a salary that keeps you alive, most likely, you just get by.
Buying kitchen appliances, unexpected health bills, car repair costs – these larger bills could put your account below zero in an instant.
With a husband across the Atlantic, I had an extra challenge when it came to keeping my finances stable. I spent a small fortune in airfares, but I always had my emergency savings for a rainy day.
In this post, I will explain you five essential steps that can take you from living from paycheck to paycheck, to having a more stable grip on your expenses.
1. Log and analyze all your expenses
If you aren’t doing this yet, then start doing this today. Open a spreadsheet and make a few columns (groceries, bills, going out, sports, …) and log every single expense you have.
That 1,20 euro parking ticket? Log it!
That 5 euro blouse you scored in the sales? Log it!
Everything needs to go in there.
At the end of the month, have a closer look at your expenses.
How much do you have monthly in bills?
How much do you need for food?
How much could you have saved by not buying lattes, lunches,…?
2. Know your annual expenses
If you work with monthly budget spreadsheets, you might forget that you have large expenses on a yearly basis as well. These expenses could be your tuition fees, your car maintenance or your city and water taxes.
Identify these expenses, and know exactly in which month you can expect them. Then, consider how much you should put aside in the months prior to that, in order not to get too tight in the month with the big expense.
Now that you have an idea of how much you actually spend, start to make budgets.
You can tell yourself for example a maximum amount to spend on eating out. Likewise, try to shop in the grocery store for a given amount each week, and keep track of what you put into our cart while you’re browsing around.
4. Save something every month
Try to save a small amount of money, every single month. It’s plain simple: if you want to have a cushion for a rainy day, you should spend less than you earn, always.
5. Drastically cut out the small expenses, reward yourself with a larger one
You can go really far in cutting out the small expenses – and I’ll go into that in a next post. Then, identify something large (maybe a kitchen appliance, or a fancy book) that you really want. Start putting half of the money you save from the small expenses aside for your dream project, and the other half for a rainy day.
By rewarding yourself for saving money, you will feel motivated to keep up this lifestyle and not revert to old habits of overspending and living from paycheck to paycheck.
Do you keep track of your expenses? Do you use budgets? Share you experience in the comments section!