I'm talking about budgets. People hate budgets. They hate making budgets, they hate trying to live on budgets. But that really is because people don't understand budgets. They don't understand the real importance of one and they definitely don't understand how to create a budget you can actually live on. I know I sure didn't before someone taught me.
First off budgets serve one very important purpose....knowing where your money is going. Now I know a lot of people who say, "but I know where my money goes". Really? Do you? Do you truly know where ALL your money is going or do you just have a vague idea of where it goes beyond the basic bills? This is really important. If you only know where some of your money is going then you only have control of some of your money.
To start your budget you must first list EVERYTHING you need to spend money on each month. Mortgage/rent, electric, water, TV, internet, phone, gas and groceries are pretty standard things but there are other things that you may need to include. Do you have meds you take on a regular basis? Or regular doc appointments? Maybe manicures? These things need to be listed in your budget. What about car repairs and clothing? You may not spend money on these every month but you should be saving up for these expenses because you know they're going to come. Here's what my categories are. They're split into two sections because the top ones are the things I use cash for and the bottom ones are the ones I pay via online. The "Blow" category is my spending money. I can "blow" it on whatever I want. And there is no such category as "misc". That's a meaningless category that basically says you don't know where that money is going.
Gas
Car Repairs
House Repairs
Groceries
Meds
Blow
Doctors
Clothes
Savings
Mortgage
Insurance
Security
Electricity
Water
Phone
TV/Internet
One you know where you need to assign money to each month now you need to decide how much goes to each item. You always take care of your "four walls" first, meaning you pay for your basic necessities: housing, food, transportation and utilities. So fund those budget items first. Once those are funded move on to other bills such as credit cards and loans. For a start fund these for the minimum payment due. Its easy enough to adjust those later if you have the money and I'll do a post soon on how to pay these things off. Next is things like car/home repairs and medical stuff. Finally, what you have left over you divvy out among what other things you have left. Make sure to give yourself some blow money. No one can stick to a budget that doesn't allow for them to have any spending money. It may not be a lot, depending on your financial situation, but even a little is better than none. When I was working to pay off my debt I only had $20 a month for spending and I thoroughly enjoyed spending that $20!!
The critical part to a budget is making sure EVERY penny is accounted for somewhere. This is known as Zero-based Budgeting. The money out should equal the amount in each month. It is the only way to really know where your money is going and money that goes where you tell it to is now working for you.
Love to talk about budgeting so feel free to leave any comments or questions.
First off budgets serve one very important purpose....knowing where your money is going. Now I know a lot of people who say, "but I know where my money goes". Really? Do you? Do you truly know where ALL your money is going or do you just have a vague idea of where it goes beyond the basic bills? This is really important. If you only know where some of your money is going then you only have control of some of your money.
To start your budget you must first list EVERYTHING you need to spend money on each month. Mortgage/rent, electric, water, TV, internet, phone, gas and groceries are pretty standard things but there are other things that you may need to include. Do you have meds you take on a regular basis? Or regular doc appointments? Maybe manicures? These things need to be listed in your budget. What about car repairs and clothing? You may not spend money on these every month but you should be saving up for these expenses because you know they're going to come. Here's what my categories are. They're split into two sections because the top ones are the things I use cash for and the bottom ones are the ones I pay via online. The "Blow" category is my spending money. I can "blow" it on whatever I want. And there is no such category as "misc". That's a meaningless category that basically says you don't know where that money is going.
Gas
Car Repairs
House Repairs
Groceries
Meds
Blow
Doctors
Clothes
Savings
Mortgage
Insurance
Security
Electricity
Water
Phone
TV/Internet
One you know where you need to assign money to each month now you need to decide how much goes to each item. You always take care of your "four walls" first, meaning you pay for your basic necessities: housing, food, transportation and utilities. So fund those budget items first. Once those are funded move on to other bills such as credit cards and loans. For a start fund these for the minimum payment due. Its easy enough to adjust those later if you have the money and I'll do a post soon on how to pay these things off. Next is things like car/home repairs and medical stuff. Finally, what you have left over you divvy out among what other things you have left. Make sure to give yourself some blow money. No one can stick to a budget that doesn't allow for them to have any spending money. It may not be a lot, depending on your financial situation, but even a little is better than none. When I was working to pay off my debt I only had $20 a month for spending and I thoroughly enjoyed spending that $20!!
The critical part to a budget is making sure EVERY penny is accounted for somewhere. This is known as Zero-based Budgeting. The money out should equal the amount in each month. It is the only way to really know where your money is going and money that goes where you tell it to is now working for you.
Love to talk about budgeting so feel free to leave any comments or questions.
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