So…. you want to learn to budget….
I hear these all the time:
- “I need your help!
- I totally need to budget!”
- “I’m so bad at budgeting!”
- “I have no idea where my money goes”
Nearly 80 percent of American workers (78 percent) say they’re living paycheck to paycheck, according to a 2017 report by employment website CareerBuilder. (CNBC)
Notice that the quote says “SAY THEY’RE LIVING PAYCHECK TO PAYCHECK”. Truth is, most of these Americans that think they don’t make enough money have no idea where their money is going. They don’t have a budget and they continue to accumulate debt.
I’m here to tell you that you can make things work if you start identifying where each of your dollars go!
I know a lot of you want to know how to eliminate your debt, but today I just want to write about creating a budget. You can’t eliminate your debt if you can’t figure out where your money is going.
Step 1: LIST OUT YOUR EXPENSES: Look at the last 31 days and figure out what you spend money on and make sure you total each category (group up your groceries expenses). (Rent/Mortgage, Utilities, fast food, groceries, prescriptions, credit card payments, car loans, insurance, etc…)
Step 2: Figure out how much you make a month and subtract your expenses from it. YOUR EXPENSES SHOULD NOT BE MORE THAN YOUR INCOME! If you end up with a negative number, you need to cut back on spending.
Step 3: Create 2 lists for your expenses. List 1 will be NEEDS and list 2 will be WANTS. NEEDS would be things like rent/mortgage, utilities, gas, insurance, etc… and WANTS would be things like cable, entertainment, take out, etc… Get it? See the difference?
3a. if your expenses are MORE than your income or they almost equal out, its time to find things to eliminate/cut back from your expenses.
3b. if your expenses are less than your income, its time to start a Debt Snowball to eliminate any debt you have.
Step 4: Continue to monitor your expenses! You need to continue to total them up monthly to make sure you are not overspending. I don’t want to spend hours of my time tallying up receipts so I use Mint to track my expenses. Guys… Mint.Com has literally saved me HOURS!!!
It doesn’t stop there! Find ways to increase the POSITIVE difference between your income and expenses. Cut back on your groceries by budgeting an amount for the month, cut back on take out, start meal planning (will help you stick to your Grocery budget), shop around for new insurance, start finding ways to be more energy efficient… There are probably a million ways that you can save money. DO IT! The extra money can be applied to your Debt Snowball to help you pay it off faster.
There are multiple budgeting methods and I don’t want to keep you here forever so I’ll link below some budgeting methods that are tried and true! Figure out what works for you. Cash Envelopes never work for me. I hate handling cash. But I found a method that did work.
Check out my YouTube Video on these Budgets
However you choose to budget, make sure you have a plan.
I know my monthly budget and each month I divide it by pay weeks so I know how much I have per paycheck for each category and so I don’t forget to pay anything important. For example, If I get paid biweekly, and my monthly grocery expense is $450, I have $225 each paycheck to spend on groceries.
Here is a copy of my Nerdy Mom Budget: Please Note that its a weekly budget for a YEAR!
My budgeting method is very intricate and took me a long time to get use to it! Feel free to look at it and try it but if it seems too much for you, try a simpler form.
Budgeting is not fun or easy but living financially free will be AMAZING! Set a goal to live debt free! That is my goal! I have changed my mindset to stop trying to “Keep up with the Jones” into a minimal content mindset.
Keep your life free from love of money, and be content with what you have, for he has said, “I will never leave you nor forsake you.”—Hebrews 13:5
Please comment any questions you may have! I know there is so much more to cover but here is a start!