Budgeting 101

Budget.

That word used to make me shiver. It used to make me think of old boring people…like my parents who always talked about “the budget.” We gotta stick to the “budget!” It sounded HORRIBLE.

Unfortunately, as I get older (but definitely not more boring) I realize how essential creating and sticking to a budget is to your financial fitness.

I talk about money a lot on this blog because it’s something I ENJOY, so it’s no surprise that I had a reader ask me how I budgeted each month!

I recently read a post that The Healthy Everythingtarian did and I budget VERY similar to how she does. So, our posts may be pretty dang close to the same, but it’s the only way I know how to do it.

First of all, I only get paid ONCE A MONTH. When I first accepted that job, it freaked me out because I was used to getting paid every two weeks. Getting paid just once a month, at the beginning of each month, really forced me to learn how to budget…otherwise, I’d be counting pennies at the end of each month eating ramen noodles (which happened a few times).

So, let’s start from the beginning.

I always check my pay stub online about a week before I get to see exactly how much I will be getting that month. My paycheck varies sometimes due to how much they are taking out for my retirement. Some months it’s a little more and some it’s a little less.

From there, I start working on my budget. It usually takes about 15-20 minutes now, but it took me around 30-40 minutes the first few times I did.

I have tried to Excel Sheets, online programs and who knows what else…but I tend to work best with a notebook and a calculator. Simplicity, remember?

I outline THREE things:

• Income: Money coming into my account.
• Fixed Expenses: Money going out that stays the same each month (rent, car insurance, etc)
• Variable Expenses: Money going out that changes each month (hair cuts, vet bills, shopping budget, etc).

I take my income and subtract all my fixed expenses…

• Rent
• Cell Phone
• Car Insurance
• Internet
• Utilities
• Netflix
• Money taken out for Mutual Fund
• Gas (Gas is fixed for me…I keep my monthly gas spending to 80 dollars)
• Groceries (I also have a groceries budget that I stick to each week and that stays fixed)
• Savings (Savings is a FIXED expense for me…there’s no ifs and or butts). I realize some months it’s just impossible to save…like this month, but 10 out of the 12 months of the year, I put in the exact same amount each month.

All of these are the same each month (except for utilities, but they don’t vary too much.) So, I know at the beginning of each month that I’m going to be able to pay for all the things I need to. Once I subtract all my fixed expenses from my income, I know what I have leftover for my variable expenses (aka…the more fun stuff…minus the pet costs).

I’m left with variable expenses now..These could include:

• entertainment money (eating out, movies, shopping, etc)
• beauty money (hair, nails, eyebrows, etc).
• Pet costs (heartworm medicine, etc…this comes up from time to time)

Knowing exactly what I CAN’T spend because I need to pay for things helps me so much. I have to budget money in for groceries and gas–otherwise, I will end up with nothing at the end of the month because I spent it shopping.

So, once I’ve figured out my budget, I go one step further to help me stay on track.

• I go to the bank at the beginning of the month and take out cash.
• I get my gas money in cash and grocery money in cash. I put them in separate envelopes for each week. I find having cash already taken out of my account for things like gas and groceries really helps me to stay on track. Once I’m out of the cash for my groceries for the week…I’m done, I don’t spend more.

I take saving money one step further.

• All the $1 dollar bills and change I get, I save.
• Once I get a good chunk of money saved up in my drawer, I take it to the bank and deposit it into a special savings account strictly for travel or items I’m saving up for.  Having this account and knowing that I’m funding it with $1 dollar bills from the cash that I get out each month gives me some incentive to only pay with cash. Plus, I never miss my $1 dollar bills or change.

I’m not an expert by any means. This is simply what works for me. It’s also not rocket science and I believe anybody could do it.

The Healthy Everythingtarian had some great final tips so I will copy and paste and leave you with her final thoughts on budgeting…

Prioritize. What is important to YOU? It could be food, new clothes, traveling, saving up, having a nice place to live, eating out, etc. Whatever it may be, decide what that is, and be prepared to sacrifice other things to spend money on what you deem important.

Recognize wants vs. needs. Why must a girl be forced to decide between what she wants  and what she actually needs in her life (ugh, toilet paper)? However, asking myself the age-old question, “Is this a want or a need?” helps me keep in check.

Debt. Pay it off first. Don’t argue. Just do it.

Set aside some fun money. As I like to say, life is meant to be lived. If you blow $40 at the bar on a Saturday night kickin’ back brews or – gasp! – $10 on a jar of nut butter. C’est la vie. Just know you will have to cut back somewhere else to balance things out.

Carry cash. While some rando could jump you on the street leaving you penniless, I find the odds of that happening are slim. For me, what is much more likely to happen is pulling out the plastic at four different grocery stores and before I know it, having burned a $100 hole in my pocket. Cash is tangible – you see it; you know how much you have; and you can monitor it much better.

Thanks Holly for the great tips!

Real quick before I go..my breakfast. Nothing exciting! It had to be quick. I had a little mini Milla on my hands who was being stubborn and didn’t want to go to the bathroom this morning.

Are you a cereal freak? You might find Lindsay’s post on how to build the perfect bowl of cereal!

What are you budgeting tips?