Are you constantly afraid to check your bank account? Do you stress out about your spending but can’t seem to stop the impulse shopping? You need to get on a budget! Today, we’re going to talk about how my budgeting has changed my life and how to start changing yours.
When I decided I was going to really commit to getting control of my finances in January 2019, I decided that I was going to make it a goal to write out a budget and track my spending every single month. In the past I had always convinced myself that I had a general idea of what I was spending and that I didn’t need to write out a specific budget to have my finances organized. I was totally wrong.
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A budget is a tool
A budget is just a plan you create for your money so you can send it where you need it to go instead of wondering where you spent it all. I’m not sure how I was able to know I could cover all my bills, get gas and groceries, and still have spending money before I did a budget!
Writing out a budget is important to me because it gives me a direct goal to work on. If I have $100 in my grocery category for that paycheck, then my goal is to stay under that $100 limit until my next paycheck. I’m able to know exactly how much money I’m making in debt payments and how much I’m saving during the month. I’m not sure how I was able to know I could cover all my bills, get gas and groceries, and still have spending money before I did a budget!
I use my budget as a tool to help me reach my financial goals. Writing out exactly what I’ll be spending my money on help cuts out unnecessary purchases. It keeps me from spending too much on things that aren’t high on my priority list. I also don’t stress about my finances as much because I know exactly how much I have to spend at all times.
How you can get started budgeting
I think the key to being successful with budgeting is finding a method that works for you. Writing out a budget for an entire month just doesn’t work for me. I get paid on the 15th and 31st of every month, so doing a budget for each paycheck just makes more sense in my head. It’s easier for me to keep track of and it’s easier to stay on budget for a two week period instead of an entire month.
I also prefer to create my budget in a spreadsheet format and then track everything in my budget planner. In Excel, I don’t have to worry as much about messing up any math. I keep my budget in my Dropbox so I can access it anywhere. You can do a spreadsheet or pen and paper, you just have to find what works.
There are a ton of different methods for budgeting that you can try. It doesn’t have to be perfect from the start – try out a few different methods until you find the one that really works for you. Your budget is supposed to be a tool to help you manage your money. If it’s not doing that it might be time to try a new method.
Track your spending
Starting a budget can also be hard when you really have no idea where your money is going. I had to really look at what I was actually spending each time I got paid in order to create a realistic budget.
Some people go through their bank statements for the last 6 months to a year to figure out what they’re really spending their money on. What I did was track all my spending through a pretty average month. Every month will be different, but I chose a month without a lot of unusual things going on. I wrote down every single dollar that went out and what it was for. You will probably be completely shocked by what you’ve been spending money on!
Once you have a general idea of how much money you spend on different things, use that to create categories for your budget. For your very first budget, don’t try to cut your spending by too much. Changing your habits can be hard. If you immediately try to cut your grocery budget to $200 and you’ve been spending $600, you’re probably not being realistic. You’ll be setting yourself up to be disappointed when you go over budget.
In the first month or two, you just want to get used to having limits and tracking where your money is going. And you do need to track everything! Start a spending log where you track every purchase you make during the budget period – where it was, what it was for, and what budget category it belongs to.
Keep in mind that your first month of budgeting is probably not going to go well. Your first 2 or 3 months of budgeting are probably not going to go well. You are learning a new skill and it’s going to take some time to figure out the details.
My advice for these first few months is to not be disappointed if you go over budget in a category. The important thing is to be tracking your spending. Become more aware of what you are spending your money on compared to what you want to be spending your money on.
Every single month (or paycheck), before the month starts, sit down and write out your budget for the next month. Just using the same budget every month isn’t going to work. In June you might have no birthdays or trips and in July you could have a vacation and three birthday parties. Each month will have unique expenses that you will have to account for in your budget. Doing your budget before the month starts lets you start the month with a plan ready to go – there are no excuses for not following your budget when you knew what it was before the month started!
Change is good
Getting control over my finances has changed some non-financial aspects of my life. I eat better because I don’t want to spend the money on quick fast food. It’s less expensive to buy groceries and plan healthier meals instead. I have found new hobbies, too. My gardening is helping to cut down on the veggie expenses for the pets in the summer (guinea pigs and bunnies eat a lot of vegetables!). Plus I have really enjoyed researching and putting it all together.
I’ve made it more of a priority to be spending my money on experiences over things and appreciating the people in my life as well. When I focus on having experiences, I enjoy the things I have more instead of focusing on the things I want that I don’t have.
Writing out my first budget was eye-opening. It gave me some good perspective on my financial goals and what I needed to change in order to meet them. Without taking control and prioritizing my spending each month there’s no way I would ever get to where I want to be. My budget is constantly a work in progress. I don’t think I can imagine ever going back to living without one now that I know how much less stress I have knowing I have control over my money.
Let me know what you do for your budget! Want more ideas on getting a handle on your finances?