Budgeting… This Won’t Hurt a Bit.

Just like any big goal in life if you don’t want to screw it up you need a plan.

Want to run a marathon, get a training plan.

Want to lose weight, get a diet plan.

Want to ace a test, get a study plan.

Want to not wind up broke after working your whole life?

Get a budget… You thought I was going to say money plan didn’t you.

Budgeting is like eating healthy, it really only does you any good if you do it consistently and don’t wipe out your good days with catastrophic bad days. I have this problem when it comes to eating healthy. One week I’ll eat a salad 3 days for lunch, that weekend I’ll eat a dozen donuts.

I’m pretty sure in that scenario I come out even right?

Budgeting comes down to this. Don’t buy what your can’t afford.

It’s very basic. Easily explained in by this video.

I can hear you. You’re asking how you can know when your spending more than you have. That’s where this budget thing comes in.

Here’s a simple website that will help you get started on your fist budget if you don’t have any idea where to start. (It only lets you do six categories though)

Click on the right side where it says budget and put in the amount of reliable income you have for your budgeting period. (I use months, some people use every two weeks.)

Then add in all of your regular bills by clicking on a section of the bar and entering your numbers. Don’t forget to budget gifts for friends or any other annual bills. Here’s a list of main categories to split your budget into.

  • Giving
    • 10% of income
  • Debt/Savings
    • First get yourself a $1000 emergency fund. After that if you have credit card debt, knock that crap out, then student loans. Then you can start saving up for 3-6 months of expenses and evaluate whether to save for a big purchase (house or car) or invest.
  • Rent
    • Or mortgage, if your living for free start making a mortgage payment to yourself that goes towards debt or savings.
  • Utilities
    • Again if you’re living for free bank this money.
  • Food
    • We split this up between groceries and eating out, but this is your budget.
  • Transport
    • Can include gas, insurance, repairs, car payments, or public transport
  • Misc
    • All the other stuff that comes with life. This is the category that if something bad happens gets cut off.

Once you have an idea about how much you want to spend you need to track your spending.

This part is where it gets more difficult.

There are a few ways to do this

  • Keep all of your receipts, or keep a tally in your checkbook register.
    • I’m not a fan of this because I hate paper and I can’t read my handwriting. But for those of you who keep physical planners this may be the best route.
  • Enter all of your transactions into an excel spreadsheet.
    • This one is feels more tedious, but if your diligent enough to do it and don’t despise excel this is a good solution.
  • Use an app.
    • There are tons of apps out there that can help you keep track of your budget. My personal favorite is Mint. It’s the best at pulling in all of the transaction data from all or your accounts. It can handle dozens of separate accounts, and can even sync up with your investment accounts. I will say that Mint is sometimes really bad about knowing how to categorize transactions. So you’ll want to go in a change that category, and then mark always categorize as X.
      • Honorable mention apps
        • Everydollar, we use this one because we can organize each item as soon as we purchase it. This is Dave Ramsey’s tool. We would likely use this exclusively if we could get more than a one month snapshot at a time, and if they would import transactions for free.
        • YNAB– People seem to really like this, but it’s a subscription service.

 

Remember to sit down at least every month to record and categorize your transactions. If you’re new to the budgeting game you might want to do it every week just so you don’t get overwhelmed at the end of the month.

If you can make a habit out of sticking to a good budget you won’t regret it.

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