Starting Your Budget

Well I apologize; the last year has gotten away from me!  But I am a firm believer that every day is a fresh day with no mistakes in it. 

Money and budgeting is one of the leading stressors and causes some of the biggest arguments.  So, lets work on getting you out of debt and on track to a mostly stress-free money situation.

Creating a budget is not an easy thing (that is one of the reasons I have procrastinated on this post).  Be prepared to sacrifice.  Unless you are the extreme penny pincher (in which case you probably won’t need a lot of my tips) you are going to have to give things up for now.  It is important to know why you are budgeting in order to be successful. 

Okay enough pushing it off…let’s get you on a track to financial “freedom”!  I use freedom lightly because once you learn the budgeting basics...usually you don’t go back to your old habits. 

Just like finding the right diet and exercise for your weight loss you have to find the right budget combination for your family.  Don’t be too hard on yourself.  If you can ease into the budget process, do it!

FIRST STEP: Track Your Spending

If you purchase everything on a credit card you can start your budget today, all you have to do is look at your past couple of statements to see where your money is going. 

If you pay in cash, check, or a combination of cash, check, charge, and debit.  I want you to track your spending for the next three months.  Chances are by the end of the first month you will see where your major areas of spending are. 

Main Categories:

·         Auto Repairs
·         Bills (Energy, Gas, Water, Phone, Cable, etc.)
·         Debt (Student Loans, Mortgage, Credit Card, etc.)
·         Dining out
·         Donation
·         Entertainment
·         Gas
·         Gifts
·         Groceries
·         Insurance
·         Mortgage/Rent

 

SECOND STEP: Analyze the Results

After you look at where your money is going you can then assess where you need to cut your spending. 

If you find you are spending $150 per month on dining out, sorry folks that is a luxury and if you have debt and you want to get rid of that debt and pave your way to a better financial future there is an easy way to save some money.  It is time to dust off that apron and get in the kitchen!  If you are not a good cook or lack the ability to make even macaroni and cheese from a box; it is time to reach out to a friend who knows their way around a kitchen or bring out your very knowledgeable friend…the internet.  You can learn ANYTHING on YouTube or a search engine!

I will give you tips on each category as time goes on!  I have to keep you coming back some way.  I understand most people aren’t like me and get excited about talking finances. 

 THIRD STEP: Making Your Budget

All of your expenses are categorized for the past 3 months, and you have analyzed the results of your spending, so you know (even if you don’t want to admit it) where you need to cut spending.

Add up your monthly income (if you are trying to make a parent stay at home, only use the income you will have when that happens).  If you have bonuses, DO NOT factor them in. 

If your spouse brings home (after taxes) $2000 and you bring home $2000 per month you have a monthly income of, yep you guessed it $4000 per month.  And NO you can not spend it all!  Remember eventually you need to retire, and there are always unexpected expenses.  

Fill in the chart below (please tailor it to your needs, if you need help email me):

Item	Paying Out	Coming In	Balance
Monthly Income		$4,000	4000
Gas	$300		$3,700
Groceries	$200		$3,500
Insurance	$260		$3,240
Minimum Debt Payment	$400		$2,840
Mortgage/Rent	$700		$2,140
Other Budget Items	$300		$1,840
Utility Bills	$225		$1,615
Monies Left or Over Spent			$1,615

Anyone who knows me will tell you I am an Excel nut!  I LOVE LOVE LOVE working in Excel, so, of course that is where I track my budget.  Figure out what works for you, if you find an app you can use on your phone, Word/Pages, or good old pencil, paper, and calculator. It’s your budget sheet you need to be comfortable with it!  If you need a template, email me or if there is a tech savvy person out there who wants to help me post it on this page, I would appreciate the help!

On the chart above, I listed the absolutely necessary categories; meaning if these bills don’t get paid, you will be out on the street, in the dark, no car, and/or no food.  These are must have items to live.  All other budgeting expenses go under the “Other Budget Items” category.  Cable is not a must have item, nor is dining out or entertainment.  If you are calling me bad names right now, you have to ask yourself what your goal is.  If your goal is to be out of debt, then yes I am the big bad money monster, but in the end you will love me, and I will be that cute little teddy bear you just want to hug! J

In my next post I will go into more detail about how to cut areas of your budget, get things cheaper and focus more about getting an exact budget to get out of debt!  Next time is next week, I promise, no more procrastinating, I have a job to do!  Let’s get you on track to financial “freedom”!