The dreaded “B” word…
A monthly budget can be incredibly helpful in tracking your costs. The simple act of writing down your income and spending will assist you in being aware of how your money is spent. There are essential items in your budget like rent or food, and there are spending habits that could be considered frivolous. Some see it has a visual hindrance to your spending but (I think) this is the point.
It is TOTALLY up to you how you spend your income. However some people (like me), need to have a visual reminder of what they bring in versus how much they spend. This helps with not overspending and creating a savings/emergency fund.
For me, a budget is the best way I find to make sure I can have a successful savings plan. There are times when I have stopped writing out my monthly budget, and then realize why I wasn’t able to save any money that month. The money simply “disappears”. I know it doesn’t magically leave my account, but when I mindlessly spend money (even small amounts), it accumulates and I have little or none leftover.
Being mindful is what helps me stay on budget the most. If can make my budget for the month, and actively save when there is room for it, I’m golden!
There are many ways to write out your budget. If you prefer pencil and paper, go for it. Some like a dry erase board calendar because it’s big and bright–awesome! I like writing mine out on Google Sheets because I can access my budget on my computer and my phone.
Please note: the screenshots I will show below are an example budget setup so you can see how to create your own. Adjust the numbers for your own budget and switch things around to maximize your spending and saving. 🙂
Calculate your and anyone else’s income which is contributing to the household’s income. This is how you know HOW MUCH you can spend in a given month. You many get paid weekly, bi-weekly, or monthly–this works for all of them! For and easy example, I put a screenshot of a sample income below…
Write it down however it makes the most sense for you. If you want to write down the exact amount to the cent, do that! You can write what you make every week or just round it up and jot down your monthly income total. Knowing how much you are bringing in (or close enough) is the important part. 🙂
Write down all of your essential bills like your rent, utilities, food, etc. Next to each one of those categories, write the amount you spend each month on the corresponding item. For example, in Column A/Row 1 I wrote “Rent/Mortgage” and in Column B/Row 1 I wrote “$1100”.
Now, I KNOW these things can change. That is why I like to be flexible with my budget to a certain degree. In the winter, the electric bill is usually higher because we have heaters. And in the summer, that same bill can high because of AC use, or the water is up because your grass needs watering. Estimate to the best of your ability, and remember that this is not a legal document with your bank. It is just for you!
Write down all of the things you would count as extra spending and your savings amount (refer to the above example). This is another part of your budget that can be flexible. Some months, there will be an emergency car/house problem or a trip to the doctor. Or there may be a vacation week where you take your diligent savings and splurge big time. During these times, there may not be a lot of extra funds for saving or fun. And that is OK!
There could be months where you buckle down and don’t do anything fun, extra or even buy any clothes. All of that extra can go right into your savings account. You could have more for the next month or maybe you can set it aside specifically for something really fun like a new TV or spending money for an upcoming vacation.
I did write a block with an amount for “estimated leftover” which was an amount not allotted to a category. This is where the flexibility comes in to play. You can absolutely budget every penny but I can never get it exactly right, and I like having a tiny bit of wiggle room in my budget.
The options for a flexible budget are endless and that is the beauty of it. The budget example I used showed a bit more than half of the income was used on essential bills. The rest was split among fun, savings, etc. and these can probably be more flexible because they are not essentials for life. If you do need something more disciplined, Dave Ramsey’s website is always a great place to start.
Remember, the budget given was only an example, and I am aware there are a vast array of budgets out there. The wonderful part about doing a flexible and simple budget is that is works for any income. It does not have to be over-complicated. It is simply writing down your income and what your expenditures are.
You may be at a place where you cannot save any money. That is OK! Hubby and I didn’t really start saving until a few years after we married because we simply didn’t have the funds.
Creating and sticking to a budget takes discipline and awareness. You may want know where your money goes every month or start to save a nest egg. Your money doesn’t go anywhere YOU don’t tell it to. So to counter the thought “where did all my money go”…start making a budget and only spend what you have allotted to yourself for certain things.
Everyone can do this if they want to be more aware of their spending, and you can too!