I learned the magic of the budget about 4.5 years ago when I left a job and found myself wondering what I was going to do. The budget provided me peace in the midst of a chaotic storm. I started budgeting around March of 2007 and haven't skipped a month since. It was one of the first things Jarrod and I did to prepare for our marriage and arguably one of the best things we do each month to maintain a healthy marriage.
Starting a budget seems so overwhelming. The bills keep coming and you can't just hit pause on spending to set everything in the budget. Once you get going, maintaining a budget is much easier than starting one. But don't fear, starting a budget can be simple too!
Here are some helpful hints:
- Starting a budget is probably best done at the first of the month. This doesn't mean you MAKE the budget on the first, it means you have everything ready to go once that first paycheck hits your account.
- All of your income and expenses need to be month-specific. Groceries for July need to come out of the July budget. The world is grey, but budgets need to be black and white.
- If it's not in the budget, it doesn't happen. If something comes up and needs to be added to the budget, add it knowing that the money will have to come from somewhere else.
- Use cash as much as possible. It's much easier to keep track of and monitor than debit transactions. When it's gone, there's no more spending.
- Be realistic. Your budget needs to be a reflection of your actual life, not your ideal world. It's much easier to stick to a realistic budget that fits your lifestyle than it is to try to mold your life into a budget. The first few months your budget will change many times through out the month, but after a few trial months, you'll get the hang of it and won't have to make near as many changes in the future.
- If you get paid weekly, monthly, or biweekly, it's important to time your expenses with your paychecks. Pay your rent out of your second check from the previous month or split your cash expenses in half and only get out enough cash for half the month to prevent overdrawing your checking account.
Practical steps to get started:
Jarrod and I meal plan for the month at the beginning of the month with the calendar in one hand and the budget in the other. We try to estimate meal costs and balance more pricey meals with less expensive meals so that we don't run out of money before the month is over. But sometimes that happens and we need to readjust our budget or our menu. If we've planned on having grilled salmon on the 28th of the month, but only have $15 left in the budget for a week's worth of groceries, we'll reorganize and plan something else for dinner so that we can purchase all of our necessities without going over budget.
I have been waiting to get glasses for several years. My old pair are from late high school and while I wear them rarely, I knew it was time to get a new pair. I made an appointment with the eye doctor and discussed with Jarrod the possibility of getting glasses this month. I didn't think about it until the month had begun and we were well into the budget. He agreed that I needed new glasses, helped me estimate the cost, and together we added glasses into the budget. Because the money had to come from somewhere, we reduced how much will go into the Baby Emergency Fund this month in order to purchase the glasses. Luckily, we got a great deal because Target was offering $100 off lenses and frames!
The most important part is getting started! Don't worry about it being perfect - budgeting is messy! Just stick with it, be honest, and tell your money where to go.
Has creating and maintaining a budget helped your family find peace? How have you struggled with your budget? What tips do you have for someone just starting out?
- Start with a blank sheet of paper, open word document, or excel spread sheet. Put your monthly take-home income at the top of the page. If your income is variable, estimate low but realistic. We use an excel spreadsheet that we import into Google Documents so that it can be accessed by either of us regardless of where we are.
- With your checkbook, bank statement, or account ledger, begin to lay out your monthly expense categories. We have our expenses categorized based on whether they are cash, check, auto-draft, or online payments. Here are some of our categories: Cash - gifts, Car repairs, Restaurants, Grocery, Gas, Travel, Prescriptions, Jarrod Blow Money, Leanne's Blow Money, and Insurance Premiums. Items like restaurants, grocery, gas, and blow money is spent each month. Items like car repairs, gifts, and insurance premiums go into an envelope in our office to be spent when needed. Check Payment - Tithe, rent Auto Draft - Health insurance premium, cell phone bill, cable/internet, insurance Online Payment - Student Loan - because we pay more than the minimum, I manually pay this online each month.
- Once you have your categories set, begin to place in estimates on spending. The first few months will be challenging, but do you best to keep these figures as accurate as possible. You will change them later, I promise, so don't worry about perfection.
- After you've added in all of your estimated figures, total that up and subtract from your income at the top of the page. Hopefully there is money left over, but this isn't always the case. If you are left with a deficit, go back and adjust until you are at zero. This may mean not paying on debt, not going out to eat, or canceling cable. If you make MORE money than you've estimated you'll spend, congratulations! But you're still not done either.
- The point of the budget is to balance at zero. You will need to adjust in either direction to make that happen. Hopefully you make more than your initial budget estimate and will need to find out where to put "extra" money. We typically put ours on debt, but now that we've put our debt snow-ball on hold, we put every extra penny in our Baby Emergency Fund - our fund to be used if we need cash during this pregnancy for emergencies only.
- Once you have everything set, you live by it! Start on the first day of the month (or another convenient day based on your pay cycle) and take out the cash you'll need for either the month or two weeks. Spend only what is on the budget because if you overspend in one category you will essentially overdraw your checking account. If something comes up, reevaluate and take the money from another category.
Jarrod and I meal plan for the month at the beginning of the month with the calendar in one hand and the budget in the other. We try to estimate meal costs and balance more pricey meals with less expensive meals so that we don't run out of money before the month is over. But sometimes that happens and we need to readjust our budget or our menu. If we've planned on having grilled salmon on the 28th of the month, but only have $15 left in the budget for a week's worth of groceries, we'll reorganize and plan something else for dinner so that we can purchase all of our necessities without going over budget.
I have been waiting to get glasses for several years. My old pair are from late high school and while I wear them rarely, I knew it was time to get a new pair. I made an appointment with the eye doctor and discussed with Jarrod the possibility of getting glasses this month. I didn't think about it until the month had begun and we were well into the budget. He agreed that I needed new glasses, helped me estimate the cost, and together we added glasses into the budget. Because the money had to come from somewhere, we reduced how much will go into the Baby Emergency Fund this month in order to purchase the glasses. Luckily, we got a great deal because Target was offering $100 off lenses and frames!
The most important part is getting started! Don't worry about it being perfect - budgeting is messy! Just stick with it, be honest, and tell your money where to go.
Has creating and maintaining a budget helped your family find peace? How have you struggled with your budget? What tips do you have for someone just starting out?
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