What if you’re debt-free? Congratulations, by the way, you super star! Then obviously you don’t need to focus on debt, but where is that money going? Are you trying to save up for a trip or a new car or even something smaller like the new iPhone? Are you stashing it away in an investment account? It’s just as important that you know where your money is going.
Personally, I think the point of budgeting is just to be intentional about where the money goes. Maybe you’ve had that friend, or maybe you’ve been that person who gets the hard-earned paycheck and rewards herself with a trip through the Chick-Fil-A drive thru and then goes out to drinks with friends and then maybe buys that cute dress you’ve been eyeing at Old Navy. And then, three days in to your next two-week pay period, the money has seemingly evaporated, and you had no clue until your debit card was denied at the grocery store. I personally know far too many people in this boat, and it’s a self-perpetuating cycle.
The idea of budgeting is simply to know where the money goes at first and then to gain some control over where it goes. So, really this blog is meant for my first time budgeters out there. Here are my tips. I am a natural organizer and planner, if you can’t already tell from the name of the blog. I have been planning out where my money goes since I was 7. Now, that might mean that it went to a new pack of gum or a new game for my GameBoy color. (I totally just dated myself). It might occasionally mean that I managed to save up enough to buy something slightly larger, but more often than not, one week’s allowance just barely lasted the week. I was 7, dude, give me a break! At least I knew where the money was going. I used the envelope system, which my dad introduced me to. (By the way, if you have kids, this is a super simple and fantastic way to teach money management). Every week, I was given $7. Per the household rule, a tenth ($.70) went to tithe, although you can totally give that money to a charity of your choice. Another $3 went into my savings envelope, and the rest was mine to spend (so, like $3.30). That’s a fortune for a 7 year old.
Fast forward to now and I still use a variant of the envelope system. It works great even now; it’s simple and easy to use. I just have a lot more “envelopes.” There are ways to do this system digitally as well as with paper money. The point is to gain some control over where the money goes.
Alright so you don’t like the envelope system. That fine. Here’s the low down on several other super popular types of budgeting.
- Values Budgeting: Basically this type of budgeting reroutes your disposable income (the money you have left after rent and bills and groceries) to things that make you happy. For example, if you love travel, then why is half your disposable income going to swinging through the drive thru instead of saving for a cruise? Basically it’s putting the money where your heart is.
- Debt Budgeting: This type of budgeting reroutes disposable income to paying off debt (my husband and I will be hanging out in this realm for a bit). There are all sorts of guides out there for paying off debt, so I am not even going to spend time on that.
- Investment budgeting: This type reroutes your disposable income to some sort of investment account, be that a high-interest savings account, a stock portfolio, or a 401K (etc). Again there are endless ways to invest money, and I am no expert, so I am not going to spend time here.
Basically, these types of budgets are there to pay the bills and reroute the disposable income to the things you value most, which begs the question of what you value most. Being debt-free? Taking a vacation in Hawaii for your anniversary? OR just small things like a weekend spa retreat or a new laptop or a fancy dinner somewhere? You and only you can answer that question, and you have to do that before you can really start budgeting.
My quick budget recommendations:
- Figure out how much you make each pay period. Write that number down.
- Figure out your expenses and write those amounts down. Are they consistent each month or do they change month to month?
- Rent
- Utilities
- Doctors Visits
- Groceries (See my Meal Planning Blog for more details)
- Any other expenses
- Subtract expenses from paycheck
- What you have left over = disposable income
- Figure out what you value most (see above)
- Put the money towards those things
- P.S. If you are in a relationship, I recommend budgeting for date nights. (If you are married, this is even more important).
Budgeting is like the furthest thing from rocket science. It’s just like dieting. Calories in much be less than calories out. Money in must be more than money out. Simple. as. that.
Until Next week,
Mrs. Ashley Seguin
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