Okay, I’ve shown you our bare bones budget, now it’s time to make your own. There are tons of blogs, books, and websites about budgeting, but it can get overwhelming. I’m not going to try to cover everything, just share what works for my family. You’ve probably had a moment, at least once or twice where you wondered “Where does our money go?” because you’ve spent your paycheck and have very little to show for it.
A budget helps you be intentional with your spending.
Track your spending
Unless you are already very intentional with your spending, you probably waste more money than you realize. We use a cash envelope system, but for tracking purposes, it’s just as well to swipe your bankcard. Then you’re sure to have a record of expenditures. See how much money you’re really spending on things like eating out, luxury shopping, entertainment, convenience stores, etc. The amounts will probably shock you, but it will help you get a starting point for whittling down.
Plan Your Spending
Now that you’ve seen where your money is going, start to plan where your money is going. Instead of being blown about by your financial state, drive it instead. That is the freedom of a budget.
- Make a list of expenses. The first thing you need to do is make a list of monthly expenses and the due date for each…mortgage, rent, health insurance, car insurance, TV, electric, water, trash pick-up, cell phones, house phone, savings, etc. After you’ve made that list, see if you can reduce any of these bills. Tithing isn’t a “bill” but we consider it a necessity, so it’s included at the top of this list. These bills are the things that we pay through bill pay straight from our checking account.
- Use your paycheck. Know when you get paid, and use that info to help your budget work for you, whether you get paid weekly, every other week, twice a month, or monthly. So often I see people make comments like, “we were broke and then we got our electric bill,” or “we were broke and then our rent came due.” I know that sometimes things happen, but if you’re intentional with your spending, you won’t find yourself in that position quite as often. My husband gets paid twice a month on the 15th and the 30th. The majority of our bills (including our mortgage and car insurance) come due at the first of the month, so out of our 30th check. That wasn’t working for us, so I divided them all out so that it’s fairly even, even though that means some things are paid early, or written down in our check register early. But, the bills get paid first, so there is no stressing about it later.
- Make your list of spending categories. After you have all your bills, you’ll know how much money you have to work with for your other spending areas. This is one useful thing that I learned from Dave Ramsey—the envelope method. Our categories are simple: Grocery (includes household items like cleaning, personal care, etc.), Misc (includes car repair and other household repairs), Gas, and Spending (includes clothing, entertainment, homeschool needs, gifts, eating out, and anything else we need to purchase). For these categories, we use case envelopes and when it’s gone, it’s gone.
- Be intentional. Every cent should be accounted for somewhere. If your budget allows for it, give yourself a small amount of splurge, but work it into your spending categories. Don’t allow yourself to waste money without knowing where it’s going.
I know a lot of people cringe when they hear the word “budget,” but I actually find it very freeing. The truth is, you already have a limited amount of money to work with…you can either make it work for you, intentionally, or you can spend your life wondering where all your money went. I encourage you to be intentional with your spending, even if you don’t make a detailed budget. If you missed it, I shared our bare bones budget earlier in the series.
Any questions? Any other specific ideas for what worked for you in creating your own budget? Please leave a comment with your thoughts.
Other topics in this series:
~Why Debt-free? (What the Bible says about debt)
~Our Budget (Frugality is necessary)
~Frugal Living (The Grocery Budget)
-Poor is in the attitude, not the bank account.
~Frugal Living (Saving on other expenses)
~Create Your Own Budget
~Our plan to be debt free (including our mortgage!) in about 6-7 years.
(Disclaimer: I am NOT a financial advisor. I am just a mom with a family living on a single income and I want to encourage others that it is possible to live on a tight budget and still have your needs met and be content…and get out of debt! I really hope that our personal budget information will help someone.)