I’ve already spoken about the importance of setting and sticking to an annual budget for your wardrobe in BGW Year 1 of 5. If like me you are a man of modest means, the amount you have to spend is best marshalled in an annual spend. Moreover, a budget is important in order to ensure that your 5YP remains within appropriate bounds.
Setting a Budget
The obvious question is how much does one need to build a gentleman’s wardrobe? The answer will depend very much on the gentleman in question, his starting point, tastes, and of course what he can afford from disposable income. Nonetheless, one of the reasons that it is a 5-year project is to make it more affordable.
By way of example, an average of £25 per month may not sound like it would go very far towards a 5YP, but having £300 to spend sounds a different matter. Over 5 years this would produce a total budget of £1,500. £35 per month would produce an annual budget of £420 or £2,100 over 5 years. If working with a £300 annual budget there is no reason why yours couldn’t be a 7-year project creating an equivalent total budget of £2,100.
For some, these figures would represent quite a small budget. However, one man’s small budget may be another’s small fortune. The primary issue is not the size of your budget; rather it is that you know what it is and seek to work within its constraints.
If as you read this you have at best only a vague idea what is your average monthly or annual wardrobe expenditure, and can’t recall when was the last time you possessed ‘disposable income’ I suggest that you would benefit from doing some further work sharpening your overall household budget. There is little hope of maintaining the budget for your 5YP if the wider context of your household finances is not similarly well managed.
To state the obvious 5YP is a leisure pursuit, a hobby. Some people build engines, have an allotment, or collect stamps. I’ve got a 5-year project. So despite being important to me, it is nonetheless a low priority in the grand scheme of things. Part of the point of setting a budget, then, is to ensure that 5YP remains appropriately something you spend money on after the essentials are covered.
5 years is a long time so you should to set your 5YP budget annually but also be prepared to revise it as your situation changes.
My guess is that whatever the size of one’s 5YP budget the temptation will be to exceed it. That’s because the list of items which we might like to add to our collection almost invariably exceeds our budget.
I know quite a lot about this because I confess that in each of the previous 4 years of my 5YP I’ve failed to stay on budget. Most years it’s been by a modest amount, apart from year 3 when my failure to stay on budget was, shall we say, less modest…. I am determined to be under budget in year 5.
Here are some of the lessons I’ve learnt the hard way about staying on budget:
- Have some idea of what you hope to add to your collection each year, ideally a priced shopping list to keep you on track.
- Prioritise your acquisitions. Your budget rarely stretches as far as you would like. So get the critical things first. If the budget runs out, less critical things can be shifted into next year. If you come across what appears to be a great deal, ask yourself whether it is a priority or not.
- Keep all receipts in an easily accessible location. I keep my 5YP receipts together in an old mobile phone box. I tend to keep all my other receipts also, but in separate matching box.
- Keep track of what you have spent. I maintain a spreadsheet which records what I spend on 5YP activity each year, including when it was spent, and in what category. You may not need or like a spreadsheet but you need something more reliable than your memory which tracks your expenditure. Crucially this needs to be up to date so that you always know how much of your annual budget you have left. In addition, it enables you to track your spending trends. So you might notice that your spending on cufflinks and accessories is very high compared to your spending on Suits and Outerwear. If so you can investigate further to explore why that might be.
- Be prepared to return. If an item falls in price or simply in your estimation return it and utilise your budget more creatively.
Reviewing Your Budget
The point of a budget is to chart where you want to go based on the best information you have at the time. However, every budget is based on estimates or even guesstimates. So once you’ve got near the end of the year, and even better once you’ve gone through a few years you should review your budget to make it a better process.
If you are constantly exceeding your budget then a review might help you figure out why that is. Do you lack in financial discipline? Is your budget unrealistic? Have you spent so much on ties that any additional items take you over budget? Perhaps your records are insufficient to the task. If you are great at setting a budget but less great at sticking to it then without a review that situation is unlikely to change.
However, as important as budgeting is, it remains primarily part of the planning and analysis phase of your 5YP. In the next post I’ll talk about the execution phase, financing and paying for your 5YP.