Budget. What a word. What a concept.
I like to budget. Well, let’s rephrase that. I have fun playing around with Excel to see where I can ‘find’ more dough.
In the past, I’ve looked at budgeting as equating to not spending $. This is not practical either! It constantly feels like I’m being an ‘active’ budgeter, when in reality all I’m doing is quibbling over every nickel, dime, and penny.
Budget has many meanings, actively looking ahead and preparing for, a systematic plan, a summary of estimated or intended expenditures, but it does not mean NOT spending. It means being realistic. It means being thoughtful. I like these things!
I do feel like we need stronger education on financial decisions. Some of this is personal responsibility, some of it parental, some of it is fair and clear descriptions of different financial products, be it a car loan to a 401K application. I’d like to see younger generations really have an understanding of personal financing.
For me, I’ve come from a budgeting family, to somewhat forced penny pinching days of college, to then choosing to live a simple life in a service community for a year. Post-year of service has been more difficult to mindfully live a more simplistic life- I don’t have the financial constraints as much, nor do I have 4 other people holding me accountable. But, it is possible . I’d rather put money in it’s place in my life- something that is a gift and blessing, and sometimes a thing I worry over and feel I don’t have enough of, but it does not rule my life- than money boxing me into a corner.
Alrighty, so where are the tools that exist today? I LOVE, hear it LOVE, Suze Orman. Practical, clear, and humorous, she dispenses information that is understandable for all. Check her out on TV, or any of her books- my favorite is Young, Fabulous, and Broke. She addresses many situations 20-30 year-olds face in their first few years in adulthood- buying a car, a house, choosing a retirement plan. And yes, you can be super smart and pick this up borrow this resource from most libraries!
I hear that Mint.com is another great resource – I have not used it myself, I just prefer the standard ole’ excel spreadsheet and check in with it on a routine basis.
Ask around- friends, mentors, parents, etc! They often can spout out some tried and true tips. Google it up too- another gal recently posted about budgeting, check her out!
For those who want a DIY version, see below!
Budget Basics: Break down to monthly expenses, to have a clear understanding of where your dough goes.
|– Car Insurance|
|– Car Maintenance|
|– Health Insurance|
|– Medical Co-pays|
|Total monthly expenses|
|– Medical visits|
|– Dental visits|
|– Gym Membership|
|– Car repair|
Ok then pop in those ‘need to do’s’
|– Roth IRA|
* Note- yes I did put Donations into “expenses”, and your retirement and savings into “need to’s”- for me, this is how I always divided things up. I wanted to be accountable to myself to not forget to give my monthly charitable donations (see this post), whereas I knew I would not forgot to save or put $ into my retirement. Adjust as you see fit.
Next take you monthly Net income (i.e. after taxes), and subtract your expenses. Net income is easier to rough calculate if you can withhold a decent amount on your taxes (i.e. pay up front every pay check, vs. need to pay a lot come April 15). If not, google tax brackets for both federal and the state you live in, and/or look at your pay stubs. Voila! This is what you got left, baby, to spend, save, give, whatever.
|Income after taxes|
|– Saving $$$|
|– Other Spending $$|
Again, this is how I do it- some people would breakdown what they spend on movies, Netflix, coffee, manicures, then calculate. For me, I want to know what I have to spend, before I spend it.
Save, credit, and purchase wisely, folks!