Budgetings 101

A lot of people have asked me about budgeting and to provide a basic outline of how to get started.  Through Periscope (you can find me at Periscope.TV/Stacycreditsavvydiva)  I spent a week educating people on the do's and don'ts of budgeting.  In some ways this is material that takes a lot more than a week to really delve into but I decided to post this information on my blog for those of you who have no idea where to even begin.

So Day 1, let's get started. 

These are the basic questions you have to answer when it comes to budgeting.:
Who needs one?  
Why have a budget?
What's the point?
What needs to be on there?
What doesn't need to be on there?
Why is it important to have a budget?
Do you really have to have a budget?

There are a lot of reasons to have a budget.  You want to pay off debt, save more money, put money aside for a trip or a present for someone, need to pay for a project or just in general need to figure out where your cash is going every month.  The reasons for starting a budget are varied but it is an important step to financial freedom.  The fact is not many people have a budget or know how to stick to one. 

Dave Ramsey believes that having a budget puts you more in control of your finances, and I have to agree with him.  He says that you have to tell your money where to go instead of allowing money to have all the power.  And it’s true.  You must have a plan, a written plan, that you follow that puts your money where you want it to go or where it must go so that later in the future you are not wondering what happened to it.  

You have to have a system.  You have to have a way of keeping track of your finances, daily, weekly, monthly.  You need to have a way of keeping track of all that.  

My husband and I are really good at the whole paper part of a budget, but honestly, when it actually comes to adhering to the budget… well, that’s another story.  The truth is, a budget (a written plan) is nothing more than that unless you are going to implement that plan and moving forward make sure you do this on a regular basis.  If you get paid weekly, biweekly, bimonthly or monthly YOU must have a plan and you must stick with it.  

A budget tells us what we can’t afford, but it doesn’t keep us from buying it - Robert Fulghum

So here’s the deal, this week we are going to talk about budgeting, about goals, about priorities, about expenses and making the commitment and the steps to creating a successful budget, but I want to be honest with you right here - if you have no intention of actually following through on a budget then really you are only hurting yourself in the long term. 

One of the things I really want to talk about starting next week is debt management and how to get your spending under control.  I almost feel as though that is a better starting place than budgeting 101, but I wanted to give you what was asked  for you so you’d know I’m listening and I do hear you.  So tomorrow we are going to talk about goals verses priorities and why this is important when creating a budget.  

Remember: if you aren’t willing to implement and follow through on it, a written plan or budget will only get you so far.  It will help you to be more aware but it won’t actually do anything for you.  

Budgeting worksheet and resource links:

http://www.kiplinger.com/tool/spending/T007-S001-budgeting-worksheet-a-household-budget-for-today-a/

http://www.consumercredit.com/financial-education/budgeting.aspx

https://www.daveramsey.com/budgeting/how-to-budget/

https://www.consumer.ftc.gov/articles/pdf-1020-make-budget-worksheet.pdf

http://www.budgetworksheets.org

http://christianpf.com/free-printable-budgeting-worksheets/

These links are all to different styles of budgeting worksheets.  My husband and I use a spreadsheet that we’ve set up with all our expenses.  I personally really like Dave Ramsey’s worksheet but I also like budgets that are simple and easy to read so if I were single and didn’t have a huge amount of expenses I would use the consumer.ftc.gov/articles/pdf-1020-make-budget-worksheet.pdf simply because it is an easy to use format.  If you have any questions please let me know in the comments OR head over to my Facebook group Credit Savvy Diva and I’ll be happy to answer them.

Want Freedom? Make a budget.

Budgeting may come very easy to some people but not come so easy to others.  I personally was never someone who was very good at it.  I like to spend money, not save it.  Honestly though, I have found over the years that it is important to make money work of you and the only way to do that is to have a budget.  

A budget may seem restricting or feel like you're limiting yourself.  But don't see it that way.  Try to think of it as a way to give yourself freedom.  Freedom from being overdrawn, fees, being broke or just not having options.  

Oppression when it comes to money comes in many forms.  From not having security to being able to pay for things you need to having to rely on others to not having any flexibility. 

A budget is freeing.  It gives you security in knowing where your money is going and that you have enough to pay for what you need.  It's not having to rely on others for your sense of worth and well being and it's having the flexibility to do what you need to do when you need to do it.  

If you need help starting try going very basic.  Start with what you bring in and what you have to pay out.  Then go from there.  Try  keeping a log of what you spend and how you spend it.  Do it for 1 day and then carry on for 1 week.  You will start to see patterns.  Create some goals, both financial and personal.  This will help you to see where you need and want to focus.  

Budgeting will help you to find the freedom to do the things you want and need to do.  I can't promise that just because you budget everything will fall into place but financially, once things start falling into place, you will begin to see your life going a bit smoother.  

Budgeting - it's not that hard but it's not that easy

There are a few things you need to remember when it comes to keeping a budget.  

First off, it's not easy.  You can find a ton of resources to help you.  Go online and type budgeting into Google and you will find worksheets, advice and lots and lots of information about where to start.  It may seem almost overwhelming but remember, if you don't start somewhere you'll never get anywhere.  

Secondly, It's not a quick fix.  If you think that a budget will magically solve your debt issues or make saving money a breeze then you're mistaken.  Budgeting will help you to reach your financial goals more quickly and effectively than if you don't have a budget but it's not going to do it overnight.  It will show you where you are spending the majority of your money and where you need to work but it won't magically add money to your bottom line each month.  Only by adhering to and doing your best to stay focused on your goals each month will you start to see your finances make a shift.  

And third, If you don't actually follow the budget than you probably won't get very far.  It's ok to get frustrated.  Everyone does.  Sometimes it feels like you'll be paying down debt forever or only putting a few dollars into savings every pay period.  But remember that it's not a race.  Everyone moves at their own pace and if you have a goal you will eventually get there.  

So keep working at it and stay focused so that you can eventually be where you want to be.  

3 things you MUST do today when it comes to your money

#1 - Create a budget.  

You need to know where your money is going each and every month.  If you don't have a budget you will start to feel like your money is just disappearing and you have no control over it.  I went through a period a few years ago where I didn't have a budget and I was always broke by payday.  Once I started keeping a regular budget I was able to start saving and always knew where my money had gone or where it was going.  I was never late on a credit card payment, a car payment or rent.  I knew how to make my money work for me and it felt really good.  

#2 - Make sure you are putting money away into an emergency fund or a "rainy day" fund.

Emergencies to happen and you don't want to have to rely on a credit card or feel stressed every single time one happens.  They are inevitable and they will happen and usually when you are the most broke (or so it seems).  So do yourself a favor and start putting money aside from your paycheck just for emergencies.  If you're single or make less than $20K a year then start with $500 in a savings account.  If you are married and make more than $20K then start with $1000.  Once you have paid off your debt then you should work on having anywhere from 3-6 months worth of expenses set aside for future emergencies.  This sounds crazy but with the world as volatile as it is 3-6 months of expenses can go pretty quickly so make sure you are ready in case you lose your job unexpectedly or something comes up and you need to deal with it.  And remember that an emergency fund is strictly for emergencies.  Try not to dip into it for things that are needs or things that you forgot to budget for.  

#3 - Invest in yourself and make sure you have a 401K or IRA set up. 

I realize that not everyone works (haha, like me!) but it is important to set aside money for your future.  If this is something that you don't know how to do then talk to someone who does.  You can find financial planners at your local banks and credit unions or ask family members if they know anyone who can assist them.  If you need someone, you can always head over to Dave Ramsey's website and see if you can find someone through him.  Remember that you want to find someone you can trust and some one who is looking out for your best interest and not their own.  If they want to put you into something that sounds risky or if you don't know what they're talking about make sure you do your own research so that you can be on your game.  It's your future and your retirement and you're financial future! 

Guilty

My husband and I sat down and talked about our finances yesterday.  Budgets meetings are always so much fun - note the sarcasm.

Does anyone else ever feel super guilty about spending money?  

I have this problem where I feel guilty spending money, even if I know that they are things that are needed.  I never used to feel this way, but since becoming a stay at home mom, I feel like I have to be very careful with what I spend and how I spend it.  I don't want my husband to think that I'm just buying things to buy them and at the same time I want to feel as though I'm contributing to the family finances, even if I'm not.  

When I was working I never felt guilty about putting something on my credit card because I knew I could pay it off.  When I was working I used to put money in my savings account regularly and I knew that I would have it for a rainy day.  When I was working I didn't feel too guilty for buying an expensive handbag or a few pairs of jeans or a new pair of shoes just because I wanted them.  

Now that I'm not working, I feel like I have to justify everything I buy.  

I am a consultant for 2 companies, Jamberry and Norwex.  I love both products.  In the beginning I felt like I had to spend money in order to be successful but I've found over the past few months that I need to be better focused on only spending my commission on trainings, products and marketing material.  I have a separate account that I only use for those companies and I try to not use any personal funds for anything related to them.  

As far as the kids are concerned I feel bad if I don't take them places or do things with them during the summer.  So I have done a few things to help make things easier in that department.  We bought a zoo pass so we can go to the local zoo as much as we want.  It's not that big but the girls like it and it's a nice way to kill the morning or afternoon.  We also get discounts at other zoos in the area so that's helpful.  There's a local indoor playground and my 2 youngest girls and I will go there sometimes just to do something different.  We have a pass which gave us a discount and gets us so many visits before we have to buy a new one.  

Finding ways to keep spending in check can be tricky but you shouldn't feel guilty for spending money even if you aren't contributing to the family finances.  It can be difficult to keep that guilt at bay, but remember that as a homemaker you are still contributing.  You are keeping costs down in the daycare area.  You are a full time housekeeper, cook, chauffeur and while you may not see yourself as contributing or saving money for the family, you are definitely doing that.  

It may be difficult at first, but talk it over with your spouse because they need to know how you're feeling as well.