“You’re meticulous,” he said.
“Yeah, I kinda have to be on the ball ‘cos I’ve got so much going on,” was my reply. And at that point during our pre-nikah talks, I knew my future husband approved of the budgeting scheme that kept me afloat with two kids and a house to run and I also knew that our money matters would be left in my hands.
Being a once-single mother living in London, planning and maintaining a budget was, and still is, an absolute necessity. With rising prices and stagnant wages, having a good handle on what goes in and out of the financial pot was the only way to be able to ensure we would get through each month. I admit that setting out a monthly budget is also in line with my nature of not wanting to leave any stone unturned – meticulous is most certainly an accurate description of who I am.
My budgeting plan for the month consists of dividing our monthly income into several ‘pots’. I use a budgeting system I came across several years ago that aimed to get you onto a path of financial liberation – where money becomes less of a focus in life. It involves splitting income into pots that are assigned with their own percentage calculations, with the total equalling 100%. It might seem a little complicated at first, but once first calculated, it’s easier on a monthly basis, especially if there’s a consistent stream of income each month.
The pots are assigned as follows:
- Necessity pot (55%): as the title states, this is the pot that all necessities – i.e. bills, rent,
etc. – come from.
- Untouchable savings pot (10%): think ‘big savings’. This is the pot that you build up as a family for large items or expenditure, for example, a new fridge or a family holiday. This is the pot that should essentially keep growing without being dipped into.
- Touchable savings pot (10%): running a little short each month? Does the necessity pot need a bit of topping up? This is the pot to be dipped into.
- Education/enrichment pot (10%): income should be enriching and having some money set aside for books or any sort of educationally enriching item or activity makes it feel less like money is only being spent on bills.
- Self/treat pot (10%): for me, this is my most loved pot because it’s for me. If I want to treat myself to a new notebook and pencil (my major weaknesses!), this is the pot it comes out from.
- Charity pot (5%): I honestly don’t consider the money from this pot as my income. My mind has already deducted the 5% from the monthly budget, as it is a purification of our finances more than anything else.
So now we have the pots in order, let’s see what it looks like in real calculation terms. For the sake of this example, let’s imagine a family has an income of £800 a month (or dollars, euros, rupees, etc. – any currency works).
- Necessity (55%) = £440
- Untouchable savings (10%) = £80
- Touchable savings (10%) = £80
- Education/ enrichment (10%) = £80
- Self/ treat (10%) = £80
- Charity (5%) = £40
Having your income set out like this gives you a clear idea of what you can, and maybe should, spend money on. My greatest benefit from this budgeting method, aside from feeling in better control of our finances, was that I could work out ways to cut down on our necessity spending. It led me to shopping around for better electricity, phone and gas prices, which is also in line with being financially responsible from an Islamic point of view.
The pots don’t have to be exactly as illustrated above, and the wonderful thing about it is that it is adaptable for individual lifestyles. If you and your family only need one savings pot and would like to give a bit more to charity, it’s completely open to being reshuffled.I find the peace of mind with this method allows me to worry less about bills and money, and assign that brainpower to other aspects of my life, giving me and my family financial liberation of a different sort.
Try it out and see if it works for your family, then share the outcomes with us in a comment below.
This article originally appeared in SISTERS Magazine, the international magazine for fabulous Muslim women co-founded and edited by Na’ima B. Robert, author of From My Sisters’ Lips. Productive Muslimah readers are entitled to full free copy of the magazine today. Click here to get your free copy of SISTERS Magazine.
About the Author:
LaYinka Sanni is an EFL lecturer and freelance editor and proofreader who happily weaves words and helps others to do so. She lives in London with her husband and two children, and can be found tapping away at: http://FromTuesday.wordpress.com