We have to take the kids.
I know. I know you are probably thinking, what kind of jerk would go to Disney without the kids? And, lucky for my kids, not this kind of jerk lol. Anyhow, in anticipation of Disney (well, and the new baby), we have decided we ought to revamp our budget. We havent done so since we moved to Nebraska, and now that things are settled down, and we have made our home here, it's time. So, I think the month of October, we will have a budgeting month series - so we can all budget together. And maybe you can go to Disney as well!
Part 1, Budgeting your life
Budgeting is important. Everyone knows that on an abstract level, right? But why? Why is it SO important to have a budget? There are a lot of reasons, actually, and we'll go through many right now.
1. It gives you power.
This is my number one reason for budgeting. It gives you power in your life. It lets you see exactly where you are at, and where you have come from. It allows you to see where you are going. It creates a road map for you to follow.
2. It saves money
A given, obviously. When you track your money, you are more aware of where it is going and spend less frivolously. (This is the part that gets you to Disney World!)
3. It builds discipline and organization
A budget helps you know at a glance where you are at, and it holds you accountable to the commitments you have made.
4. It can be a stress reliever
Often, STARTING a budget is stressful. BUT once you get through the feel bad stage lol it helps you relax. It shows you where you can cut back to create an emergency fund, and it helps to reassure you that you ARE in control, and you ARE making good choices. It allows you to improve your habits and lessen your debt.
The steps to starting a budget are simple.
1. Make a list of goals and values.
What is important to you in your financial well being? What goals are you working towards? For me, some of these things were Disney! but also, reigning in unnecessary spending. Eating healthier, and more whole at home. Knowing exactly where our money went. Bulking up savings. Once you have established some values, you can make goals - I suggest short term to long term - 30 days, 3 months, one year, 5 years, and so on. Long term goals are great, but starting with short term goals help boost confidence as you meet them shortly, and help keep you on track to MEET those long term goals because you have a current idea of where you are at.
2. Figure out your expenses and determine your income.
Go through whatever method you currently have of tracking your money. Determine what is coming in and what is going out. The check book register (yes, some people really do still have these lol), your spreadsheet, your online banking statements. See where you are spending your money. Separate everything into two columns - fixed expense and flexible expense. Here are some of mine:
2. Figure out your expenses and determine your income.
Go through whatever method you currently have of tracking your money. Determine what is coming in and what is going out. The check book register (yes, some people really do still have these lol), your spreadsheet, your online banking statements. See where you are spending your money. Separate everything into two columns - fixed expense and flexible expense. Here are some of mine:
Fixed
- Mortgage
- Student Loan Payments
- Daycare/school tuition
Flexible
- Gas
- Clothing
- Gifts
3. Create the budget.
There are a TON of resources online you can use for this. Next week's post will be a detailed post on budgeting worksheets and creation, so stay tuned!
There are a TON of resources online you can use for this. Next week's post will be a detailed post on budgeting worksheets and creation, so stay tuned!
Take out all the hard work you did last week, and get it all together. The first thing to do is look for a template that works for you. I have posted here three that I like from simple to more complex - choose one that fits you, based on your preferences. It doesn't matter if you choose based on what is more easily formatted or which color you think is prettiest - choose one that appeals to you. Once you decide, you can fill in all of your information - both fixed, and flexible spending, income, savings, and possibly a 'grace' amount, that allows for some error - or, you know, you are running late and decide a breakfast sandwich from McDonald's is going to be faster than making breakfast at home!
Once you select one, grab a glass of wine, or juice, and a quiet corner. You'll want to take your time as you input things. Don't fret if you find you forgot something - just add it now. Chances are this will be a moving, changing document for you. When you are finished, put it all away, and take you mind off of it for a few hours, then go back to it, and just make sure you have everything you want or need in there. Some people also like to list balances they are working on - such as credit card balances, school loans, home loans, etc, so they can see the number going down (hopefully) every month - it can be encouraging. That's all we are doing this week! It doesn't seem like much, but it can be very taxing to see the input and outgo of your month, so after you are done, just relax and kick back!
Enjoy!
~Danielle
Once you select one, grab a glass of wine, or juice, and a quiet corner. You'll want to take your time as you input things. Don't fret if you find you forgot something - just add it now. Chances are this will be a moving, changing document for you. When you are finished, put it all away, and take you mind off of it for a few hours, then go back to it, and just make sure you have everything you want or need in there. Some people also like to list balances they are working on - such as credit card balances, school loans, home loans, etc, so they can see the number going down (hopefully) every month - it can be encouraging. That's all we are doing this week! It doesn't seem like much, but it can be very taxing to see the input and outgo of your month, so after you are done, just relax and kick back!
Enjoy!
~Danielle
This week, we are working on the functionality of your budget. You've had a week now, to think on things, and see how they are going. What you will need this week if your spreadsheet, and your check book, or however you keep track of expenses.
First things first, look through your budget once more. Make sure you are meeting all your needs - and make sure you are paying yourself. Some people like to put aside a certain percentage of money each month, and some people select a dollar amount. At our house, we have set dollar amounts that go into our emergency savings, 3 month savings, then our 'whatever we are saving towards right now' and our daughters savings account. Those don't vary, and if need be, we cut from other areas first before cutting from savings. We also put the grace money that isn't used into our savings each month.
After you make sure you get your savings sorted out, go through your budget and consider where you can make cuts. For instance, maybe you go out to eat as a family once a week - eliminating one time out to eat, or even two, can often add $50-$100 to your ability to save each month. I know in our budget, we were able to cut our gas costs by a third each month, just by altering our work schedules so that my husband could drop my daughter and myself off each day and pick us up. We also cut down eating out to twice a month, as well as started meal planning, which has saved hundreds of dollars alone.
Another thing that helps is setting an allowance of sorts for everyone. We don't have a lot of weekly costs, so we each take out $20 a week for discretionary spending. It is much easier to turn down lunch out at work when it will use all of your spending money, versus just swiping a card. Keeping daily discretionary spending to cash only is a fast, efficient way to cut down on spending.
Now that you have freed up some money, gather your cc's. If you have none, that's great. If you have some but maintain a zero balance, even better! If you are like most of middle America, you are fighting a losing fight to pay down the debt. So, sit down, and write down all of your cards, their balances and their interest rates. Pick the one with the highest balance, and pay as much as you can (while still paying yourself first) towards that card. Maintain your minimum (or higher, if you can) payments on your other cards, and just move towards carrying a zero balance on all cards.
One last tip. Make sure your spouse is on board. Budgeting and becoming debt free can be very stressful and frustrating - don't shoulder it alone if you have a partner. They helped you get where you are and they will help you better your position in life.
Hope this helps! Enjoy!
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