For some people budget is a big scary word that means you can't spend money on the things you enjoy. It's not true though! If you budget right, a budget is a big fancy word that means I have money to spend on things that are important to me. See the difference? Maybe not yet. But lemme break it down. You don't have to restrict yourself (unless you're spending more $ than you make) but rather determine what's important to you and send your dollars there.
In college I never had a budget, I wasn't spending tons of money, and I didn't think I needed one. Flash forward to my first job out of college, I was raking in seriously big bucks, driving a company car and didn't have a single worry about money. Until I quit. I couldn't take it. The job, the company, the people, were sucking my soul and it wasn't worth the money.
I was living on my own, in an apartment by myself, 5 hours away from my family. 100% unemployed, and with no next job lined up - but plenty of student loans to pay. So, I sat down, looked at my accounts, and made a budget.
This was back in 2013, and I've been budgeting ever since. So much so, that I've got it down to science now. I usually know by rough guesstimates in my head if I'm over or under, and I don't track quite so religiously now.
I'll be back to share my budget, and some real numbers for spending in a future post. In the meantime, here are the 6 steps that got me started with a budget.
1. Decide how to track expenses
There are fancy apps, there are plain old spreadsheets, there are printables to use with plain old pen & paper. But decide on how you will track your expenses. Do what works for you. They all yield the same result.
2. Track your expenses
For a whole month - save every receipt, make note of everything you buy with cash. No purchase is too small to count. Add it all up, using your app, spreadsheet or pen & paper. Write it all down.
3. Determine your income
Figure out how much money you make each month. Since I work that corporate cube farm life, I know I get paid every other Friday, the same amount, give or take a few bucks, since dental comes out only once a month, not twice. For me, I add up those two numbers, and poof, that's how much money I make each month. I don't have a side hustle. I don't occasionally make some extra cash, that's it.
Your formula may be a bit more complicated depending on your situation, but sit down, take a few minutes, and figure out, worst case scenario what you'll bring home next month.
4. Figure out the necessities
In my opinion, the easiest way to do this is to take a look back at everything you spent the month prior & determine what you could live without. Not would want to live without. But, if you lost your job right now, what would you need to survive. Start there, with the basics.
Rent - necessary
New shoes - probably not necessary
Groceries - necessary
Starbucks - not necessary
5. Figure out the wants
This is where Starbucks & Target runs come in. Now that you know your income & your needs, you know if you've got some $$$ leftover to spend on the fun stuff. You probably will, but you may not. That's okay, there are ways to make it work. The important part is not spending more money than you make each month.
6. Adjust spending as needed
Now comes the hard part. You want to save up for an epic vacation, but you're having trouble finding room in the budget. Well, would you rather have your Starbucks or an extra $20 a week towards vacation? For some people, the answer might be Starbucks, for some people it might be vacation...for some people, they're saying I don't buy Starbucks, so I can't quit it & have an extra $20 (I actually fall into this category myself). The point is there IS something you can do without, if you want to, but you've got to find what that something is.
Do you budget?
Where do you prioritize your spending?
Shoes? Starbucks? Vacation?
Did your parents make learning about money a priority growing up?
Linking up with Amanda to share + LovePastaToolBelt, A Little R&R