Budgeting 101
Hello everyone! Today, we’re going to talk about my experience with budgeting. It has definitely been a journey. I want to alleviate the misconceptions about budgeting, and give you my advice so you can start out on your best foot forward, whatever your money goals are.
I started keeping track of my money and bill payments as soon as I had bills to track. I started officially budgeting two years ago. By budgeting, I mean I wrote down my expenses, and tried to limit myself in my spending. Not that I was a crazy spender, but when you have a youtube channel that revolves around stationery, there are costs for that. We will refer to that as inventory, as it were.
I began to do more research into budgeting. Last year, I wanted to get the Budget Mom’s Paycheque to Paycheque Work Book, but it was the middle of the year and I just couldn’t justify the purchase for half a year’s use. Instead, I found Alaina @ the Organized Money on Youtube and purchased her $11.00 Etsy Printable Budget Book. I used it this entire year, until mid September, when I switched to the PDF printable version of the Budget Mom’s Paycheque to Paycheque Workbook. I have already pre-ordered my full-size workbook for 2022.
I think when people hear the word “budget”, they think it means that they need to cut back on their spending, or that they have to limit themselves. It all comes down to how much money you receive, and what your goals are. Having a “budget” doesn’t mean you have to stop spending, it means you have to spend smart.
The very first thing you need to start with is to figure out what you want. Do you want to save money? Is there something specific you want to save for? Or, do you want to start paying off debt? The next thing is to examine your spending habits. You can use a planner, like me, or you can write it down on a blank piece of paper. Every time you spend, write it down.
Based on your spending, you will start to see patterns. Your next move is to determine your spending categories. What do you buy on a regular basis? What are the things you pay for every month? Bills are an obvious one, but subscription services are another one that tend to sneak up on you. It seems nowadays, you need to pay a monthly or yearly subscription fee for everything you use. Make a separate list for subscriptions with the dates of when they come out of your account(s).
The next thing to do is to figure out what your variable spending categories are. These are things like food, gas, entertainment, pets, etc…
The Budget Mom Budget Planner does a great job of “funneling” down your expenses. You write down how much you make, how much goes toward bills, how much your variable expenses are, and, if there is money left over, savings/sinking funds and debt. When it comes to debt, it’s important to maintain the minimum payments on your credit cards. (Ideally, you want to pay more than that, but there are certain debt repayment methods which we’ll discuss in another blog). Suffice it to say, pay your minimums, and if you have extra money left over at the end, pay more towards your debt.
Keep in mind that everyone has a different money goal. If paying off debt is paramount to you, you may not be able to save right away, and that’s ok. If you are already debt free, you may be able to save more money and possibly start a new investment or two.
BUDGETING STEPS
Write down goals you have for your money (Keep it simple; 3-5 is good).
Prioritize those goals and work in that order
For each month at a time, write down all your expenses.
At the end of the month, categorize those expenses into your budget categories (i.e. Rent/Mortgage, utilities, Insurance, Subscriptions, min. credit card payments, RSP’s, other investments, bills that are roughly the same amount per month and come out at the same time each month). Note: You only have to do this once, but you may end up tweaking your categories every now and then.
Categorize your variable spending budget categories (i.e. Food, entertainment, pets, fun, gas, car maintenance)
Set savings amount or sinking funds (Eg: $100 each payment into short term savings. Eg: Something you want in 4 months will come to $500, so create a sinking fund for that item of $125 per pay cheque).
Remaining money goes toward debt payment, or, if debt free, put it towards additional savings.
Remember, the last two steps can be reversed, or cancelled depending on your goals or needs. Also, in order to maintain the habit of recording your expenses, try and check in every single day. Your budget will only work for you if you do the work.
Another important thing I learned from the Budget Mom is that if you have a spending problem, the issue is all about your mentality. The longer you do this process, you can re-train your brain.
To make it even easier, you can move to a cash envelope system (Which is what I’m doing starting in September 2021). You can do this for variable categories that you are having trouble with. (i.e. Uncontrolled spending).
Honestly, I find it a lot easier to save money when I have specific savings categories. If I had one account with money in it, just for the sake of saving, I would probably spend it on random things. I find I hold myself more accountable when I have cash, and it makes me feel good, knowing that I can already see progress in my spending habits.
By the time this blog goes live, you can check out my youtube channel, where I will have posted some budgeting videos for you. Here is the latest one: https://www.youtube.com/watch?v=kIG6DPLzMc4. I will be using the 2021 Budget Mom Paycheque to Paycheque Budget Planner until December, and then the 2022 version in January.
I hope this blog has helped you in some way. Let me know in the comments!
Much love & Happy Budgeting!
💚 Sandra
