Before we get into the nitty gritty about how to put together a budget and all of that, I first want to talk about the importance of budgeting, and some issues that may need to be addressed before you get serious about budgeting. About 2 years ago, I decided to really begin keeping track of my finances, in order to better pay off debt, begin saving, and live! To be honest, I am a bit of a spender. I would definitely rather spend my money than save it. So it’s safe to say, that I did not have much of a savings built up, until I met my husband. Thank God, that my husband is also a spender, but he is a very smart saver. I have gotten better at saving now, and working together with my husband, we have really been able to build our savings, as well as pay off some loans. Before you begin budgeting, it is important to determine whether you are a saver or a spender. Generally, if you’re a saver, then hopefully you’re not too worried about debt. However, if you’re a spender, then debt is most definitely an issue.
If you have issues with spending and love to shop, or always have to have the newest gadget or the best items, then before you can really successfully get out of debt, some life changes may need to occur. I really am not a licensed professional, but if you cannot stop yourself from spending money or shopping, you may need to get professional help. If your money is tight, and you love to swipe those credit cards, then you need to get help with that IMMEDIATELY. Cut up your credit cards, or keep them at home in a drawer and not in your wallet. Do not go to online shopping sites, just close your laptop and stay away! If you have the room in your budget for spending, then great! But, if you continuously find your credit cards racking up debt, and you’re falling behind on payments, then it would be wise to find help!
When it comes to budgeting, so many people have the same response “I don’t need to be on a budget”, or “Oh, I kind of keep track of my spending”. Honestly, Budgeting has gotten quite a bit of a bad rep. Many people believe budgeting is only valuable for young college kids, young adults just starting out, or young married couples, or lower income individuals. Often times, people think that once you hit the magical age of about 30, budgets don’t matter and they’re only for getting out of debt. Well let me tell you, that thinking is DEAD WRONG! I’ve said it a million times, if I had $100 to my name I would have a budget, if I had $100,000,000 to my name I would still have a budget (Just with a lot more zeros).
DO NOT BE ASHAMED TO BUDGET! The online webster dictionary defines budgeting as an estimate of expected income and expense during a given period of time. Basically, budgeting simply means you keep track of your money! Which is what everyone should get in the habit of doing! If you have money coming in and going out, you should have a budget. Budgeting is no longer ONLY for the lower income or young adults! It is for EVERYONE! Here are a few rules to remember when it comes to budgeting.
RULE #1 (Said in the voice of genie from Aladdin) (p.s. I like movie quotes)
Know how much money you have coming in and how much money you have going out each month. NEVER have more money going out, than you have coming in. I mean, it’s common sense… If you look at the amount of money you make each month and what you spend each month, and the spending is more then you are IN DEBT! Simply put, if you only have $10, you should not buy something for $15. If you do this on a regular basis, then you will end up with A LOT of debt.
This is where people can get into trouble, it’s the first mistake people make, especially when they have credit cards. DO NOT fall into this trap! Or, maybe you already have! I’m here to tell you it’s going to be OK! The first thing to do, is the same in every situation, first you have to admit you have a problem with spending, especially when it comes to using a credit card. If this is true for you, then I would suggest keeping your credit card AT HOME!
Be consistent and prioritize. Make time for what is important, and trust me, budgeting is one of them! Once you set up your budget, it won’t take long to maintain, just devote 10 minutes a week, that’s really all the time you’ll need! Keep a written record of your purchases for the week, and record them on your master budget. That’s right, EVERY PURCHASE! Even that $2 coffee, or that $1 candy bar, keep track of everything!
Just a quick funny story… My husband is a therapist, and when he would work, he would take the kids for a walk to the local 7/11. They would usually buy a slushie, and my husband started buying one a few times a week. Sometimes he would even pick up a candy bar or a snack while he was there too. He said these exact words to me “They’re only like $2”. Well, what I did was ask him to keep track of the money he spent at 7/11 and at the end of the month we would total it up. By the end of the month, he would rack up a bill of about $90! When I showed him the total, his mouth dropped. He didn’t even fathom that the money would add up that quickly. I said it was fine that he wanted to do that, we just needed to make sure we fit it into the budget. But, he chose to just not get a slushie each time, he figured he really didn’t need it. I challenge you, add up that coffee you get daily from Starbucks, or those little treats you grab while waiting in line at the grocery store. You’ll see how easily and quickly they add up!
COMMUNICATE! Now this rule is more for the married, or couples, or families, but COMMUNICATION IS KEY! Sit down and figure out your budgeting categories together, figure out how much you want to save, and how quickly you want to get out of debt. Be honest with how much you spent grocery shopping, or how much you spend on your night out with friends. A general good rule of thumb, especially when budgets are tight, is to COMMUNICATE with your significant other. My husband and I adopted the rule that if ether of us are planning on spending more than $50, we will tell the other one, even if it’s on a gift or present. Now, we don’t spoil the surprise! But we do communicate the amount that we are planning to spend.
Alright, well hopefully these rules helped bridge some gaps about budgeting. Thank you so much for reading! Please comment below whether you’re a saver or a spender! Feel free to ask any questions, or if you want to talk feel free to send me an email! Thanks!