The hardest part when deciding to do anything new is actually deciding to do it. Actually starting to eat healthier, starting to workout, starting to heal from a broken childhood. If you are determined that there’s nothing actually wrong with said behavior, action, feeling whatever, then why would you want to change it and make it better?
It’s the same with a budget. When you really decide to make some kind of change with how you spend your money, or what you need to spend your money on, the changes can come easily.
Once you’ve decided with your whole heart to make a change, you need some help to push you in the right direction! We don’t always know how to eat healthier, what workouts we should be doing, or workouts that are safe for beginners, and we don’t always know where to start when we decide to finally get out act together and budget in a way that we can keep up with.
So its safe to say this budget isn’t for people with more money than they can count, it might not be for people who are always on time with their bills and never have a surprise in their account. This is for people who feel like they just can’t get their shit together money wise, they never know when something is due, they always forget when a bill on auto-pay is going to take their money, and they constantly find themselves skipping credit card payments because they can’t figure out their over spending and they can’t get it all together.
How to start a budget that works! In 10 Steps.
- How much money do you have? First thing is first, if you don’t even know how much you make in a typical pay period, you won’t be able to know how much you can afford to save, or put towards bills, or even eat. You’re walking though pretty blindly. Time to open your eyes. This can be scary if you never feel like you have enough money, but I promise- this is your first tool in gaining control of your finances. You may need to log into your bank account and look through a couple months of direct deposits from your job, or dig out check stubs, pick the smallest average amount you made and use that number. Don’t count over time, even if you ‘always’ work over. Stick that extra into savings, put it toward your debt, or give it to charity, we really don’t care about that amount right now. We want to know the lowest end of what you typically make. That’s what you can kind of count on.
- How much do you owe? Go though EVERY bill and list the amount and due dates so you know what you need to pay and when you need to pay it by. Include the minimum amount of your credit cards in this too, since you need to pay that every month and not kill your credit score. Since this is just about setting up a budget we don’t need to talk about how much you owe on all of the credit cards and have a little heart attack, we want just what has to be paid when.
- Have as little as possible on automatic. At least while you’re getting a handle on things. You don’t want surprises while you’re trying to get a grip on your finances. Mark everything you have to or decide to keep on automatic listed in a calendar. A wall calendar, a personal planner, your phone, doesn’t matter. All that matters is that it’s there and that you actually use it!
- Do a little digging. I am in the middle of learning just how much of an over spender I’ve become. What really made me see it? My bank account groups similar transactions and allows me to see how much I’ve spent at Target every month for the last year. Yikes. Go though your bank account tools, or statements or receipts and try to see how much you spend every month at Target, Starbucks, on Groceries and gas. If you have no way of seeing your past start tracking it TODAY. Hold yourself accountable, and decide not to lie to yourself. You might not be able to comprehend just how much you’ve spent. Use this to help you decide your spending limit on these things for each month, or each pay period.
- Speaking of Groceries… I’m asked often how I decided our grocery budget for each month. A great rule of thumb for this is $100 per person, per month. I have a family of 5, so around $500 was our starting budget for each month. Depending on where you live, or what’s available for you to shop at, or how many pets you have, you may need to play around and increase it, or you might get lucky and be able to decrease it. Be prepared for a couple months of failure in this category. Failure IS an option, as long as you learn from it. So change it up if this rule of thumb doesn’t work for you, and keep going! We have a family of 5 with 2 cats and 2 dogs, and after a couple months we landed in the area of $520/month for our grocery budget. This includes pet products, toiletry and hygiene products, and food.
- Use cash for everything possible! We discovered we could put at least $800 into savings EVERY stinking month! If we were determined, disciplined, and diligent enough. Coming from a house that was so used to living from pay check to a couple days BEFORE paycheck this both made me disgusted, and made me feel to damn free. We’re not broke, we just can’t stop swiping! So this month we have been using a cash budget for everything outside of bills and now we have an emergency fund set up! You might not be able to save quite that amount every month, or you may find that you can save even more than we have! But after you’ve taken a look at your spending habits and see that monthly Target total… ugh. Cash is king! Decide how much you’ll have for spending money each pay period, how much you’ll spend on groceries, or gas, or whatever else you can use cash for and take out that amount. Break it up and use cash envelopes, or small plastic file folders, and divide it up. It’s worth it!
- Okay, so, now you know what to expect in each check. You figured out when the light bill needs to be paid, and how much cash you need to take out. But don’t expect to keep all this ‘new’ information in your head. You HAVE to write it down! My preference is to just make a list for each pay period, I date the top of the list with the payday and then list out what bills need to be paid and what we’re planning to take cash out for. Take the total of the bills and cash and subtract it from what you expect to be paid (remember, don’t include over-time or extra money coming in). There’s your budget, your action plan, your rule! Put it in your planner, beside your bed, on the bathroom mirror or the fridge. Keep it in the car if you need to, or fold it up and put it in your wallet, wrapped around your debit card so that you have to physically touch your budget every time you go to use the card. Wherever it needs to be so that you can see it.
- Give yourself an incentive. Sometimes the idea of a fatter savings account isn’t enough incentive for everyone to follow their budget, or even take much interest in their budget. I get it. My husband dragged his feet for a long time on really taking a look at the finances with me. Often we would find ourselves in a place that was a spending trigger, ‘trying’ to be ‘good’ but then spending hundreds of dollars because it was a ‘good deal.’ Give yourself a little something that you CANNOT have until the end of the month. Since we were able to make our savings goal so high this first month, my husband is getting a smoker that he’s had his eye on for YEARS. For a large smoker, its not extremely expensive, but it always seemed like something came up when we actually had the money on hand to buy it. Boom. My husband is more and more going from a guy who would leave the room to go floss his teeth instead of look at this piece of paper with me, to a guy who has been saying often how much he’s enjoying our cash system. We’ve even picked the exact date we’re heading out to pick up his new
- Which leads me to the next step… DISCUSS THE FINANCES! Get real. Be honest. Don’t blame, or point fingers. Agree to truly TRY something new and see if it works for you! You are teammates! Teams don’t go back to the locker room and ignore why something isn’t working in the game. You can’t ignore what’s going on with your bank account and hope it passes. Trust me. TRUST ME. That just makes it worse.
- Breathe. Just breathe. It’s not a race, its a marathon. Get excited about what you CAN DO now that you have it all in front of you in black and white. Know you can’t fix it all in a day. The hardest part is really deciding to change it. Not just wanting to change it. I want to eat healthier, but there’s a doughnut. Now I’m eating the doughnut, so obviously I didn’t actually make the DECISION to change. When you make the real decision, and a plan to action, then you have the determination to change it for the better. Now that you’ve made the decision, you can take small steps every day to better finances, or just keeping your ducks in a row. In the meantime, breathe!
Until next time Friends!