July 17, 2020
3 Budget Tips to Start Now!
Sticking to the budget has and continues to be challenging for many of us given the extra we’ve experienced the last few months. The first is the issuance of stay-home orders. Job layoffs and furloughs started happening in industries we felt somewhat secure. For some, it came earlier than others but nonetheless it happened. Hang on to the hope!
Have you been playing the money transfer game like many of us? We transfer money to the savings account and then have to return it to the checking a few weeks later because we spent more than planned. I wasn’t planning on having a nail in my front tire placed exactly where it’s unrepairable.
Whoops. 🤦🏼♀️
While this is certainly annoying (at least for me it is) and makes it so we won’t reach our Emergency Fund savings goal quite as fast, it’s not a big deal. The emergency fund is doing its job! Remember the primary goal a budget/spending plan does is it “assigns a job to your money each month”. We work so diligently to build the fund up and when we pull from it, it hurts! Remember, we are still spending money we have in cash, aware of what it’s costing us, and making general progress in the right direction! This is so much better than pulling out the credit card and paying more over several months or years. In this case, interest is not your friend. I may not like pulling the funds out. BUT….it gives me peace of mind.
Our budget is our superpower, there is no doubt about it. It brings organization, freedom, and peace to our daily lives.
This week’s blog contains 3 tips to help you perfect your system and make it your superpower too!
Tip #1- Common Budget Categories
I’m writing the following sentence as a personal reminder to myself! Don’t get hung up on the organization! When making your budget categories, here are some common ones you may want to use. Use the ones which apply to your situation!
Common Budget Categories:
Rent/Mortgage
Insurance (auto / health / life / other)
Subscriptions (magazines / books / Amazon / etc)
Cell Phone Bill
Internet
Utilities (electric / gas / water / trash)
Childcare
Minimum Payments on All Debts
Groceries
Restaurants (if you’re working on paying off debt this is a category to really watch)
Gas
Personal Allowance
Date Night
Clothing
Entertainment
Household
Haircuts/Grooming
Tip 2- I Know I Need to Cut Back, But How Much Is Realistic?
You may be spending too much in some categories and need to cut back. That’s ok but don’t go crazy! Be realistic about how much you are willing to cut back. Start with restaurants as an example. Instead of cutting 100% perhaps step one is to reduce it by 50% in the first month. Are there other categories you could trim? Start by looking at last month’s spending in each of your categories and cut back by 10% as your new budget for the upcoming month. It’s natural to make adjustments each month depending on the outcome and as obligations change.
Tip 3- Recommended Budget Percentages
This is a sample of what a well-balanced budget would look like. These categories will probably have sub-categories too (i.e. utilities would be made up of electric, water, etc.) Use this as a guideline when you’re building a budget or when you’re reassessing your current budget to determine if your allocation is realistic. I used these recommended budget categories when I was setting up my budget over 8 years ago and are immensely helpful! The percentages are simply recommendations.
I hope you are getting the hang of budgeting and seeing the power it gives you to take total control of your money and ditch the sleepless nights and anxiety! This is much more peaceful than worrying about “how am I going to pay all the bills this month”? With no debt, an emergency fund established, saving for retirement, and paying the home off early it IS possible. I can’t wait to take the next step toward freedom!
