For many of us, this was one of our New Year’s Resolutions. The holiday bills have started to roll in. Maybe bad weather caused you to miss some hours at work. Maybe you lost your job. Maybe hours have been cut due to lack of business. Whatever the reason – this is probably the last thing on your list right now. Great intentions when we start the new year but like most resolutions by the 3rd week, they are starting to lose their luster.
Setting up a budget is tough. Monitoring your spending is tough. Believe it or not, when you have control of your money it is empowering. You can also reach your financial goals one step at a time – even if they are baby steps.
The basic idea of a budget it simple – spend less than you make. I know the kids need XYZ. I know you will put it on the card and pay it when you get paid. I have heard (and used) all of these reasons as to why I can’t save or stay on a budget.
The truth is that once I figured out what I was actually spending money on, what I wanted to spend money on, and how to automatically save – life got so much easier.
Do you really know where you money goes? I mean most of us will say we do but if we had to track every penny spent in a given week, could we? How can you create a budget, if you don’t know where your money is going. I have to admit this is the toughest part.
If you use a programs on your computer like Quicken or Quick Books, that is a great place to start. Look at your spending from the past three months. Now it may not count the Starbucks coffees or lunches if you use cash. If you are like me and use your debit card for EVERYTHING, this will be very easy. The key is to put ALL spending into a category.
Here are some categories:
- Needs: rent, utilities, basic groceries, car payment, paying off debt, etc.
- Wants: eating out, shopping, vacations, etc.
- Savings: retirement, emergency fund, savings for future purchases (such as a house down payment)
So, how does your monthly spending look? Are you spending more on wants than needs? Are those needs being put off? Believe me, I cringed when I saw that most of my budget fell into the needs category due to debt. It was time to make some changes.
I started to prioritize my want spending so that I could save and pay off that debt. I looked at my wants and decided which was the most important to me. Then I started cutting some things out. WaWa stops when I worked to pick up food when I could make and take it from home. I stopped getting my nails done every 2 weeks and made it a monthly treat.
Then I set up an auto transfer to start saving. Okay, so it may not be the recommended 20% but it is a start. On payday, I automatically pay myself first. I will admit that on months when I am short due to a smaller paycheck, I may borrow BUT I always do the transfer. Start with $5 a paycheck and put it in a savings account. It will slowly grow. I actually do $25 a month then if I get a bonus or any extra money, I split it between debt reduction and savings.
Budgeting does work. I stomped out my inner gremlins around budgeting and money management a few months ago. It made a HUGE difference in how I look at my checkbook. I have money saved plus bills are paid. I am using the snowball method to pay down debt. Honestly, it wasn’t easy but give it a try because it was so worth it. Start somewhere even if it is figuring out where your money ACTUALLY goes instead of just guessing.
I would love to hear your best tips for budgeting. Have a ThirtyOne-derful day!