I hate it when the weekend comes, but my wallet doesn’t get the memo. I have bills to pay and no money to pay them with. Have you ever been in that situation?
I used to be in that situation every two weeks; rich on payday and poor as a church mouse a week later (if that long). What changed? I started following a financial plan and learned as I went. Now I budget like a boss and take charge of my money by following these principles.
Start with a plan
Do you want to save $1000 for a new car? Are you trying to pay off your credit card debt? Working towards a goal will give you something to work for. I keep a checklist on my home office bulletin board with small goals written on it that I can cross off as I reach them. This month is: keep in the budget for gifts, no eating out for the month, pay off $100 extra on medical bill. Each time I get to cross off a goal I get a sense of accomplishment that encourages me to aim for something more next time.
Do a rough sketch
Making a budget is simple when you keep it simple. A budget can be as complicated or simple as you make it. I like to use EveryDollar from Dave Ramsey, it’s easy, free, and I can track it from my phone. I make sure I change it every month, so I am reminded of each category and can change something if it didn’t work perfectly last month. Don’t worry about being perfect, a good budget flexes with you and can be revised as many times as you need it to. A budget is simply a way for you to keep track of your spending and be conscious of what is going where.
Don’t stress the little stuff
If you slip up once in a while, forgive yourself. You might spend $5 more than what you budgeted for an outing. That’s okay, you are human, learn to forgive yourself. I make sure to stress this because the first few times I made a budget I focused on any overages. It made me feel like a failure and I would spiral out of the budget and mess up my finances more.
Did you fulfill your goals this month? How about one of them? Yay! I think you deserve a little reward. Don’t fly to the mall for a shopping spree to celebrate just yet. Instead, buy yourself a book you’ve been wanting as a treat or take yourself to coffee. When you celebrate and acknowledge the win, you will feel motivated to feel that sense of accomplishment again. It will encourage you to meet your goals and take on bigger ones. It also distracts you from any slips ups and makes it easier to forgive yourself.
This is my motto is almost every area of my life (Keep It Simple Stupid). I guarantee if I make a budget and I start feeling stressed out by it, it’s because I made it too complicated. A budget is simply telling your money where to go. The most simple way is to set up a spreadsheet in Excel each month that starts with your total income. Make a line for savings, eating out, gas, groceries, etc. until the total remaining is zero. Print out the budget and post it on your fridge, keep a copy in your phone, whatever works. You just need to know where to put your money when you get it.
Cash vs. card
I used Dave Ramsey’s cash system, except, sometimes I use a card. It’s a pain in the rear to run inside to pay cash for gas when you have two toddlers. It’s also just easier to buy some things online and have them delivered. So the problem becomes, how do you keep track of what you’ve spent on the card? Do you save receipts and then have to deal with those at the end of the day, week, month? What a pain!
I use little tracking sheets for each category. If I spend $20 on a box of diapers online, I write $20-Diapers on my Household tracking sheet. Even when I pay for groceries in cash, I write down the amount, store, and date on my tracking list so I remember where I have shopped.
This is my favorite monthly game/goal. Once I am doing well with my budget, knowing where the money is going, I start trying to pay less. I pick one bill/category each month and see if I can come in $10, $20, even $50 under budget. Sometimes it’s a bill, and I will call the company to ask about a lower rate, or shop around. Last month was my car insurance, so I got online to different companies and compared rates. I found out that I am currently paying about $50 less per month at my company than everywhere else’s quotes. I didn’t save any, but I feel awesome knowing I am getting a great deal for my coverage.
TWEAK IT CONSTANTLY
Tweaking, not to be confused with twerking. Remember that your budget is flexible. I go into mine every week or so to update it with extra income or expenditures. Even though my ending budget for the month might look very different than how it started, it still is the best way for me to see what works. If I see that I have gone over 3 months in a row on groceries, I know I need to change how I shop, or increase my food budget and take something else in.
Regardless if you are a hard-core budgeter, or a fly by the seat of your pants type, if you have a budget you are doing more with your money than 70% of Americans. That’s right, only 30% of Americans have a budget in place. So pat yourself on the back, you magnificent unicorn you. You got this!
How do you budget? Do you keep a running tally as you spend, or a detailed and mapped out budget?