^^^ This was my thought each time I sat down to create my budget. I knew it was something Ireally needed to get done but I procrastinated for so long – I just kept putting it off and saying “I’ll do it tomorrow, I’ll do it the day after, I’ll do it next week, or maybe just next month…” but I realized I couldn’t do that anymore. It’s not because I didn’t have it – but because I was afraid to share it; But, that is another post for an Open Bar ;).
The bad thing is I said I’d have this done a year ago. A YEAR PEOPLE. FAIL. But….life. However, I was able to honestly and accurately track my spending for the time I spent away from my precious blog which helped me tremendously. I figured out where my money was going and if my journey was worth sharing with others. So, not all was lost :). Planning my budget out has to be one of the hardest things I have ever done; not because of the amount of time it takes or because I don’t have the data, but because I had to be honest with myself about my spending habits. It takes a lot to look at your bank account and say “Wow, I spent a lot going out to eat” or “Man, I need to slow down on partying”. But, luckily, I didn’t have to do it on my own. So, have no fear! There is a lot of good that comes out of having a budget including having the ability to travel to Jamaica twice in one year.
I’ve spent hours days doing all of this stuff but when I tell you it is worth it.?? I feel so much better now knowing exactly how I’m spending my money and if you start now, I know you will too! So, as my baby sister would say ‘let’s get busy!’
Why budgeting is important
Do I really have to explain this? You really don’t know? Fiiinnee I’ll tell you, I guess… Here is it the big secret:
Budgeting is important because it is a plan for you to follow. See all this knowledge!
Is it concrete? No, not necessarily, but if you have specific goals you want to achieve you should follow it as closely as possible. Budgeting can help you pay off debt, save for a new car or house, pay your college tuition, save for that dog your parents told you not to get but you got anyway and now he annoys you and you sort of don’t know how he survives because sometimes you’re clearly a bad parent and don’t take him to the groomer every month…. wait, sorry…. got a bit carried away…haha ANYWHO. You know what I’m saying right? Having a budget can and will take you places.
Eventually, your budget could land you in Bali, Indonesia living it up at the age of 40 or 50 because you followed your plan so well that you saved more than enough money to retire early. Having a visible budget, (and yes I said visible because “tracking it in your mind” isn’t a thing that you should do – trust me I know) can shed light on bad spending habits, keep you from spending money you don’t have, and might even help you sleep better at night. Now Tyler… really, how can it help sleep better? Because it CAN. Just trust me, my friend, when you go to sleep at night you’ll sleep better knowing that you have the means to take care of every monetary need on your plate.
Building your budget
When I began building my budget I started with the basics: income vs. expenses. How much on average do I spend monthly and which bills drastically change? Rent, utilities, electricity, cable/internet – these bills are usually static meaning that they rarely change and you have an idea of what exactly they will be at the end or beginning of each month. These I put at the very beginning because they’re the most important and more predictable.
I love to eat, guys! So, I end up spending too much money on food it is really sad – I sat down with my aunt a while ago and we wrote down (literal pen to paper) how much my cousin and I spent on food in one month. I spent nearly $400 ON FOOD – and most of it was not groceries. I needed to come up with a number that was reasonable for myself and that would help me practice self-control. Savings/Emergency fund – this is extremely important and I was really against doing it in the beginning lol. I knew having a savings/emergency fund was important but as soon as I would put away a little money, it would magically disappear over night as if some fairy waved her (or his) magic wand and “POOF”! Gone… just like that… smh, fairies.
(Okay okay, it was me… BUT I CAN EXPLAIN… and I will… later….)
Lastly, I added all the other stuff – these things include entertainment, pet supplies, personal care items, gas, debts I needed to pay down or off, and things I just wanted to contribute to. These are variable and more unpredictable but you still need to set limits.
Tools I use(d)
Kevin. lol Yes, Kevin Matthews who owns Building Bread Inc., one of the best people ever! This is what I meant by I was not alone. Kevin is a financial advisor located in New York who manages a bunch of money (not exactly sure how much but hey, close enough) ranging from people like me who barely make a dollar, to people who have millions of dollars in investments, savings, retirement funds and so on and so forth. Check him out here! Hiring Kevin was an easy decision for me. I was having a pretty hard time sticking to my goals. But, once I got serious, I began chipping away at my student loan and credit card bills, which are now in good standing and paid off, respectively.
Microsoft Excel – I absolutely love working in excel so this was my go to. I’ve literally put everything into one big excel workbook and used simple formulas, to sum up my totals and figure out how much I have leftover vs. what I projected to have left. I added the debts that I owe off to the side so it serves as a constant reminder that I owe Sallie Mae money and the number isn’t (or is) moving. Here is an example budget to show you how I set mine up. There are a million ways to set up budgets – getting started is the hardest part so just do what makes you feel comfortable!
Mint.com – Mint is amazing. I’ve used Mint for maybe 4 or 5 years now and every time they upgrade the website or add a new gadget I fall in love all over again. I’ve hooked up all my accounts to it – student loan, credit cards, banks, even the Kelly Blue Book value of my car, you name it, it’s on Mint. For my really lazy days (and for a very long time now) mint has kept track of at least 4 or 5 years of my spending habits. Using mint to help track my spending habits helped to set budget limits because it analyzes your transactions based on a category or by merchant, income, or investments etc. if you’re into that type of thing. All you do is connect your accounts and boom, all your finances right there in front of you. No digging necessary.
Side Note: I’ve seen people just use pen and paper, there’s also a tool called Every dollar by Dave Ramsey (I’ll talk about him another day but I think he’s great – especially if you’re the type that needs motivation) that forces you to give each and every cent a name, and many others. It just depends on what you find helpful, easy for you, and what you know you’d keep up with. It’s your budget, make it fit your life!
So here we are. We’ve discussed why your budget is important, how to build one, and some tools you could use. What’s next? Where do we go from here? Execution! That’s whats next, are far as where do we go, well that’s the beauty of the journey my lovely duckling. ?
Did you get lost on the way down here? Do you have ideas of what you’d like to see next? Let me know in the comments section!