Money is such a catch 22… it is fabulous when you have it and it is very stressful when you don’t. In this day and age, it has become increasingly easy to just “swipe” now and worry later. However, that tactic will create a lot of heartache for you when the “later” finally arrives and you are looking at your account in shock. “This can’t be right?” “How did we spend so much on food?”… the questions can go on and on. Although budgeting is NOT something that I have mastered, I do feel like it is important to share some things that I have tried and found to be very helpful. Think of this list as the beginning stages of planning for a budget that keeps your expenses in mind.
Tips for creating a realistic budget
- Look at your expenses for the past couple of months. For us our largest expense (other than bills) is food. This can be a large variable. I urge you to see what you ACTUALLY spend weekly on food. This means including your Starbucks app too! Although I want to be realistic, the point in this exercise is decreasing the overall cost. We are a family of five that is always on the go. For us, I plan for $500/per week in our food budget. Good news is when I plan well that week, I have leftover money! (which goes into our extra catagory- I will go over this later). We do cook for our families on Sunday and that is one of our largest expenses. So it was important for us to keep that in mind when setting our weekly food budget.
- Plan for the areas that you don’t need daily but will need someday. For us, those areas are Travel, Home, Toiletries, Clothes, and Gifts. I have found that this is so helpful. Reason being, when you add money to it monthly, you will start to build up a reserve. For example, we add $100/per month to our travel savings. This month we had $600 in there and we can use that already set aside money when we go to Disneyworld to help offset the additional expenses when we are there. This prevents the need to swipe a card. Gifts are another category that can add up quickly. Between teachers gifts, birthday parties, etc. you always have something going out. If you don’t that month– no worries, save it and build a balance. If you don’t use it all you already have money set aside for family birthday parties or Christmas gifts.
- Have a budget that accounts for EVERY DOLLAR YOU EARN. I learned this from Rachel Hollis-Rise Together podcast with Rachel Cruez. She is Dave Ramsey’s daughter and did an awesome job explaining that is every dollar doesn’t have a designated category it goes into, you are not budgeting properly. Pretty much– plan for everything you need/want to do. Plan for your savings, a vacation, a new car, paying off debt, etc. Then when you get paid separate all of your income into those categories.
- CASH IS KEY! I can’t tell you home many times we tried our debit card, a rewards VISA or an American Express. You can’t budget your money the same way you can with cash. I know at all times how much I have in each category. For me… this reduces stress! I always have my handy dandy cash organizer with me. Envelopes can help too, but this one is my favorite and easy to use.
What to do with the extra? I hinted to this above. We require that ALL money stays in that category to build a balance EXCEPT for the food money. If there is any extra food money for that week (keep in mind I do my food money weekly) I move that amount to the “extra” category. This is my savings that I allow myself to draw from when needed. For example: our budget doesn’t allow for date nights and doesn’t plan for larger entertaining. This is a good category to pull from if you extra for a special event. We are going to Disney TWICE this month and that is a lot. So this category allowed for us to build extra in there if we need it while we are away. I don’t just PULL from it daily, I use it as a way to plan for the unexpected and I would use that money first before pulling out additional money that month.
We have been doing this for 6 months and I am happy to report that this is the BEST thing that we have ever done to get a grasp on what we spend and plan accordingly for those areas in your life that you typically would swipe a credit card to cover! If you can’t do a lot in travel or clothes– do what you can- $20/per month would get you started! You will be amazed at what you were spending! Also, I have found that when I am spending cash I think through what I am buying.
Join me in a “no frivolous spending“ month. We plan to do that in June. I will be posting some guidelines that we will stick to. This is to help us trim the budget that month AND build our savings.