Are You Budgeting?

In “What’s Your Money Plan?” I showed you how to create a money plan.  I’m finding that some people aren’t budgeting.  I was one of those people.  I knew where my money was going so why budget?   Well…when I sat down and created a budget, I found that I was spending too much money dining out.  I was buying a latte almost every day from Starbucks, buying lunch, and sometimes buying dinner.  No wonder I was broke! 

Don’t stay broke.  Start budgeting today.  See where every dollar is going.  Cut out unnecessary spending like dining out. 

Create and stick to a budget.

For some of you, the word budget is a horrible word.  But it doesn’t have to be.  Budgeting helps you organize your money and your life.  It’ll help you have money at the end of the month instead of the other way around.  Who wants to be broke before the next paycheck arrives?  Are you living paycheck to paycheck?  Budgeting helps you get out of that vicious cycle.  You don’t have to live paycheck to paycheck, my friend. 

Spend wisely.

Having a budget helps you spend wisely.  As I mentioned above, you’ll see where every dollar is going.  If you’re spending too much on groceries, dining out, or entertainment, you’ll be able to get it under control.  Maybe you buy a lot of convenience foods, like ready-made meals, bagged salads, pre-seasoned meats.  Any food that took a few hands to prepare will always cost you more.  Buy foods that came straight from the producer and prepare your meals at home.  Buy raw veggies, clean, prep, and cook them at home.  I’ve seen trays of fish, poultry and meats that are skewered, seasoned, or packaged with cut veggies.  Again, someone prepared these trays of food for you, so you’ll pay more for these foods.  Find easy, health recipes in Pinterest or online and cook your meals at home.  Plan your meals and spend less. 

Emergencies covered.

If your car broke down and repairs cost $1,000, do you have money set aside to pay for this repair or are you going to charge it on a credit card?  In the past I didn’t have $1,000 saved so I used a credit card to pay for emergencies.  My total debt got larger and larger with each emergency.  Instead of spending money on lattes and takeout, save your money for emergencies. 

Bills paid on time.

With a budget, you’ll never pay bills late.  When you pay late, you are charged late fees.  Paying late fees is wasting money that you could have used paying other bills.  In addition, late payments are reflected negatively on your credit.   When you budget, you stay organized and pay your bills on time.

Build good money habits

When you create and stick to a budget, you build good money habits.  You spend only on necessary things, have an emergency fund, and always pay your bills on time.   You’ll live on less than you make.  You are now in control of your money. 

Peace of mind.

Once you take control of your money and where it’s going, you will have peace of mind.  You’ll be able to sleep without worrying about bills and paychecks.  You’ll have money set aside for emergencies.

Where to begin?

Start with this Quick Start Budget sheet.  It’s one sheet and will help jump start your budgeting habit.  Account for every dollar of income and expense.  If you are married or living with someone and pay your expenses together, sit down together to create your budget.  Every month your income or expenses will be different so your budget will be different every month.  For example, maybe this month your car needed service, but your car won’t need servicing next month.

Bare necessities.

Remember Baloo in Jungle Book singing that song?  Start your budget covering your bare necessities, such as housing, food, utilities, basic clothing, and transportation.  It’s important that you cover these expenses first.  Dave Ramsey calls them the “Four Walls.” 

Other expenses.

Then, list your other expenses.  From these expenses, see where your money is going and choose which expenses can be cut out or reduced.  For example, dining out, going to movies weekly, or visiting the, amusement park, zoo or museum every month.  The money saved should go toward your emergency savings if you don’t have one yet. 

Debt Snowball.

Now use the Debt Snowball sheet to list all your debt.  You may be shocked, as I was, when you see the amount of debt you have.  Follow the instructions on the sheet to pay off your debt.  Cut up those credit cards because you won’t be using them again.  As you pay off the balances, contact the credit card company to close the account.