Always Broke Or Weighing What’s Important
My mother lives by the motto that you’re always broke even if you’re not, I’ve helped other pay down debt and learn how to create a budget with this same motto. She’ll pay off an entire trip to London for the two of us but if you ask her to do something she doesn’t find appealing she won’t hesitate to tell you she’s broke. As I get older, I realize this is an important lesson to learn. You can’t put everything in your life on the same shelf. Also, if you tell people you’re broke they immediately stop hounding you about going shopping, or whatever it may be. Sit down and figure out what matters to you so you know what you’re budgeting and saving for, it can be anything from travel to paying off debt. Try to choose only one or two items to focus on.
The Best App to Organize Every Dollar of Your Budget
After a lot of research into budgeting apps, I stumbled upon EveryDollar (available on Android and iPhone). I needed something basic that I had control over that took into account what was coming in versus what was going out and I found all of that with EveryDollar. I recorded our monthly paychecks then filled in line by line our needs including; rent, electricity, laundry, transportation, student loan debt, cat food, prescriptions, and groceries.
After this, I delved into our wants columns, I marked down all our subscription services then saw what we had leftover for savings and allowance. You want to aim for around 20% of your paycheck going towards savings. Anything leftover from here can go towards allowance. EveryDollar makes sure that every single dollar you bring in is accounted for then breaks that into percentages which helps you use budgeting theories like the 50/30/20 rule. Although it took a bit of training to log every purchase, after a while I became so obsessed that when the app crashed for a couple of days, I actually felt lost. Set yourself a reminder in your calendar once a week to look over your accounts and make sure your budget is up to date.
If you’re looking to get started with a paper budget or prefer paper over phones I’ve attached a monthly budget worksheet below similar to EveryDollar.
Wants vs. Needs
Unfortunately, the line between want and need has become incredibly blurry in modern times. Here are some examples of needs; a home, this can sometimes fall into the want pile when you’re picking a place you can’t afford. Clean clothes, electricity, heat, food, making minimum payments on any debt, these are all needs. Transportation within reason is also a need but can quickly fall into the want pile if you’re not careful. These are the categories that you can’t get away from not paying on.
Here are examples of wants; a gym membership, you will never convince me that an $80 gym membership is a need when you can get a membership for $20 a month. To learn more about cutting out gym costs read Finding Free Money In Your Budget. Netflix, Hulu, Itunes, Kindle Unlimited, Audible, YouTube Premium, etc. are not needs, even if popular culture would have you believe otherwise. Only pay for the number of wants your paycheck will allow. If you have no debt and can afford several subscriptions and an $80 gym membership go for it but remember it will take away from something of more importance.
Even as your salary increases, try to refrain from increasing your lifestyle to follow suit. Your needs and wants shouldn’t increase just because your paycheck does. Break any habits of keeping up with your perfect instagramable life as soon as possible. Trying to keep up can significantly affect your financial happiness.
If you don’t love being so hands-on with your budget make sure to set-up automatic payments to all your accounts. Never miss a minimum payment due date which can cost you big in fees and affect your credit score. Automatic payments can also help you significantly with your savings goal. The more that is automated in your life the easier it is to take control of your finances.
Automatic Payments Calendar
Although a lot of my accounts are paid off through automatic payments I never leave my credit cards up to auto-pay. I like to go through my accounts to see if there have been any unplanned charges. This is where my auto pay calendar comes into play. In all honesty, I’m a bit obsessive about checking my credit cards. It’s how I like to start my mornings off, some like coffee, I like bank accounts. On the back page of my planner, I keep a list with dates that each auto-pay will come out and when the next paycheck will come in so I can see what’s left over to pay on credit cards. A debit card would automatically subtract payments so you can see whatever is leftover. By keeping up on payments myself I can do the same thing but enjoy the perks of a credit card. I’ve attached an auto-pay calendar below.
Taking It Back to Excel
On top of using EveryDollar to keep track of monthly and daily expenses, I still use a good old-fashioned Excel sheet to keep track of various savings accounts such as Roth IRA’s, 401K, an Emergency Fund, and our regular savings. You can download a customizable version of this spreadsheet below in Excel form. If you’re like me and use Google Drive, just upload the doc into your drive and it will convert to a Google Sheet.
When figuring out how to afford an upcoming trip I use both my excel sheet and EveryDollar to look at the upcoming months to see how much we can put away to spend on vacation. I never plan a big trip with less than 5 months’ notice, which gives me time to pay it off monthly before we leave. Once you’ve learned how to create a budget, explore Finding Free Money In Your Budget which delves into a few tips to shave off the fat from your budget. Just remember to live the exact life that you can afford, to save for what truly matters to you.
If you enjoyed learning how to create a budget head over here to learn about credit card debt and interest rates!