Now that you’ve taken inventory of your debt and monthly payments and set up your sinking funds, it’s time to put everything together to create a budget.
Without a budget, money flows in and out of your account with no accountability. Before we started budgeting, I kept track of expenses, but only after we had spent the money. Every single month, I would stress out about how much we had spent. And since we paid off our credit card each month but really didn’t track what we were putting on it, we cut it close more months than I’d like to admit.
When we started doing a budget, a lot of that stress went away. I could look at how much money we had coming in and then decide where it should go. Brilliant! Now, I can’t imagine spending money without one.
If you want to learn a little more about budgeting, you can check out:
Again at the moment, budgets are likely going to look a little different depending on your particular job and quarantine situation. I ended up budgeting pretty much like I normally would but with the understanding that we likely won’t use up as much from each category as we normally would. Gas, for instance, I budgeted as if it were a normal month just because we have no idea what’s going to happen. If things get going in a week (doubt it), I don’t want to get caught without gas money for the month. But, whatever we don’t spend this month will either build up extra in that category or get transferred to savings.
I’ve used the Dave Ramsey Monthly Cash Flow budget for 6 years, but it never prints right from my computer, so I finally made my own. On the budget form that I created, I left a lot of room to customize. Major categories such as Savings, Investments, Sinking Funds, Bills, Household, etc are included, but for a more personalized budget, you can enter specifics into the miscellaneous category. You can also edit the spreadsheet in Google Docs or Excel if you want to customize even further.
Tips for making a budget go smoothly:
- Add up all of your income for the month and enter it at the top. If you budget by paycheck, you can fill out the budget form each time you get paid.
- If you manage finances with your spouse, discuss the budget before the month begins. Make sure that each person has a say in where the money goes and feels like they’re being heard.
- Budget for needs before wants. Make sure the electric bill is getting paid before your coffee fund is funded.
- If it doesn’t go well right away, don’t get discouraged. If this is the first time you’ve set up a budget, you may not know how much money you actually spend eating out or on shoes. Use your best guess and just go with it. You can always adjust later.
For instance, maybe you underestimated how much you need for groceries. You may have overestimated another category and can shift funds from one category to another. Like many other things, budgeting takes practice. We’ve been doing a budget every month for six years, and there are still months where expenses come up unexpectedly, or I underestimate one category (or two or three) and have to pull from another.
Working with cash
Cash envelopes are a game changer when you’re working from a written budget. It’s hard to go over on a category when the envelope is empty. If you’re just swiping a debit card, it’s really easy to spend more than you intended to.
I’ve used my Dave Ramsey cash envelopes since we started budgeting 6 years ago, but there are endless options that you can download for free from various personal finance blogs or purchase on Etsy. Figure out what works for you.
I’m a pen and paper kind of gal, so that’s how I do my budget, but budgeting apps are a great way to budget as well. Every Dollar and You Need a Budget are two of the more popular ones that can link to your bank account to help you track purchases and stick to your budget. You can have multiple people on the account, so you and your spouse can always have access to the same information.
The most important thing is to find a system that works for you.
And that’s it for Take Control Of Your Money in 3 Days! If you’ve completed the 3 day series, I’d LOVE to hear how it went!!! Comment here, email me at firstname.lastname@example.org, or DM me on Instagram @thesimplegirlsguide.