Budget. It just sounds like an overwhelming word because most of us dread the “sit down and make a budget” day. Did you know that money is the top reason that couples fight? Not over kids, housing, jobs, or the paint color on the walls. It’s money. And most of the time it’s because there’s never enough. Things happen, Christmas seems to keep coming every year just like always, your husband hits a fire hydrant and you have to get a new car (real-life story). The bottom line is you need a budget – there is no choice in the matter. Here are 10 budgeting tips you need to know to get your financial life on track.
Sit down with a piece of paper and start writing these things out. It’ll be much easier each week or month (however you decide to do it) if you have clear goals and realistic views of your money.
Related Post – Why You Absolutely Need a Christmas Budget in January!
10 Budgeting Tips You Need to Know
There are a few things you’ve got to do to even get started on a budget that’ll help you stick to it!
Write out all your debt. This part sucks if you are in a financial mess. But, you need to know exactly where you stand. Make a list from smallest to largest. Include everything. Credit cards, cars, house, that loan you borrowed from your parents, student loans, overdue parking tickets – whatever it is that you owe, write it down.
Get a cheapo notebook from the dollar store and keep this page handy. You’ll want to be able to reference it each time you do your budget. Check out this guide for must-have tips for paying off debt.
It’s surprising to me how many people have no idea how much money they have coming in. I still keep up with my checkbook register. I know this makes me sound like a dinosaur, but I have to write down how much gets deposited and how much gets taken out each month. Or I’ll end up in a mess. So write out exactly what’s coming in each and every month.
Monthly Bills –
Write out everything you have to pay each month. Cable, phone, school lunches, insurance, water, electricity, minimum payments on all the above debt, all of it. Anything that you have to pay out every month goes on this list. Now compare this list to your income. If this list exceeds your income even by a few bucks, something’s got to go. Start figuring out what can make the cut. $200 cable bill – gone. Get Netflix for $11 a month. Anything else that can be trimmed needs to get trimmed. Can you go up on your insurance deductibles to decrease your premiums? Probably not wise if you have zero dollars in savings, but worth looking into. Whatever it is, you’ve got to make the income column higher than the monthly bill column.
Do you have any? If not, this needs to be a priority. S&*# happens. You blow out a tire, the water heater breaks, the a/c goes out when it’s a hundred degrees out. Your kid suddenly goes through a growth spurt and needs new clothes. Your husband hits a fire hydrant and you have to get another car. It doesn’t have to be much at first, but at least get a few hundred dollars in a savings account that’s not intended for anything else. Have a yard sale, pick up an extra shift if that’s an option, cut the cable, say no to eating out for 2 months. It’s going to suck to scramble to get any savings, but much less sucky that the a/c going out and you’re sweating to death trying to figure out how to pay the repair guy. No amount is too small to start putting away. Five bucks here and there will add up.
Yearly Expenses –
This is an area that a lot of people neglect and when these yearly expenses roll around, they’re screwed. Insurance premiums (if you pay annually, homeowners insurance, property taxes, HOA fees, back to school supplies and first of the school year expenses, Christmas, birthdays, vacations (not necessary, but if you’re going to take them, you’ve got to figure out how you’re paying for them), and any other event that occurs once or twice a year. Sit down and write it all out. Now divide them into a monthly dollar amount. This amount now goes into your monthly bill column. If you know you are spending $1000 on Christmas every year, you better be putting $83 a month into an account starting in January. Otherwise, 12/25 rolls around and you’re reaching for the credit card.
Budget Meetings –
If you’re single, this will be easier or harder depending on how you operate. Some people do better with having to be accountable to someone else like a spouse. Some people like this independent part of their lives. Whether you’re going about this solo or with your partner, you’ve got to have budget meetings. Ideally – weekly is best, especially if you get paid weekly. Get your cheapo notebook out or make a spreadsheet in Excel. Write out what you spent and what you can pay or already paid. Add up your savings if you’ve been able to start.
Get Your Spouse on Board –
Skip this if there’s no spouse or partner to worry about. Realize that people view money differently. If you’re the one that’s trying to drag a spouse/partner into this budgeting thing, if they are a chronic spender, it won’t be easy. And you can’t do it alone. Figure out a way to discuss, not demand. Avoid these talks when one of you is exhausted. Budget talks get people uncomfortable. Especially if you’re asking someone to change their ways. If your partner spends $200 a month on fancy coffee drinks, it’s probably not ideal to tell them they are never getting that fancy drink again. Maybe ask them to cut it in half at first. Demands don’t often work in budget meetings and someone will end up getting angry and just shut the whole thing down. If you’re the one controlling all the money, write it all out and present it to them. Especially if your expense column exceeds the income column. Ask for help too. Budgeting shouldn’t fall all on one person’s shoulders.
Write out Your Goals –
Why are you even doing a budget? Trying to keep your head above water? Own a house one day? Be able to retire comfortably one day? Keep from losing your house? Get out of debt? Add a sheet to your notebook or your spreadsheet. Write out the reasons you’re even going through this sucky budget process in the first place. You’ll be happy when you can start checking off some of these goals. And everyone needs a win here and there. Once you meet a goal, no matter how small, it’ll feel like a win.
Get a Plan –
This part is a little hard and there are tons of great arguments as to how you should go about setting up a budget and paying off debt. Some people like to start smallest to largest that way they feel accomplished. Maybe you can’t even think of paying off debt yet. Maybe your plan is to start growing a tiny savings to keep you from drowning when they a/c goes out. Or, maybe your plan is to cut out all credit card use and use nothing but cash to change your habits. Whatever it is, write it down. Budgeting is never perfect the first time. You’ll have to adjust and redo it a few times before it becomes a system that works for you. But start somewhere with a plan. Don’t start out with unrealistic plans that you’ll never keep. Find one actionable step you can take and make that your first plan.
Stick to It –
Realize it’s not easy. It’s so much easier to bury your head in the sand and pretend it’ll go away. But it won’t and the sooner you get a handle on it and start budgeting, the better. Just think how much easier payday will be when there’s not money flying out the door like crazy and you aren’t sitting in a pile of tears wondering how in the hell you’ll be able to buy groceries.
You can do this. Pretty much you need to do this. Don’t be a financial trainwreck anymore. Just start. It won’t be pretty and it won’t be easy. But it’s doable. It may be hard and you may have to do some things you don’t like, but it’s temporary. Think of it that way. If you aren’t drowning in debt, your income exceeds your bills, and you have savings, then you can go back to having cable again. Maybe for a few months/years, you do without. But it’s temporary. You’ve got this. Just buck up and do it.
Tell me your favorite budgeting tools – do you use printables, spreadsheets, cheapo notebooks? Do you have a great tip I missed? Bring it on!
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