Budgeting for Your Future

When I sat down with my husband for us to create our first budget, we were both nervous to see the real numbers in our finances. We both knew we needed to do this if we were going to make any real traction in paying down our debt and getting the rest of our finances in order. Here are some of the things we did.

Chose a budget tracking system

Before we could start budgeting we had to choose a way to track everything. Previous to us getting married my husband told me about the Mint app. The Mint app allowed us to keep track of our spending in real-time. It allowed us to create budgets within the app where we would get alerts when we go over budget in a specific category. So we continued to use that app as well as inputting all out expenses into an Excel file with Google sheets.

Looked at our spending

We looked at our spending for the current month and the previous month to gage roughly how much we were spending. We realized that the months prior we had gone over budget by about $1K each month. That realization was not a fun moment.

Created the budget

In our first budget we filled in our projected incomes and expenses for that month. We started with the basics. I must admit that we were living with my Mom during this time so we weren’t paying rent, however, we were responsible for the internet, tv, home phone, and the grocery bill for the house. Side-note: our grocery bill is above average because we buy only organic food, so that was about equivalent to paying rent. Aside from our other personal stuff like gas for the car, car insurance etc., we also had to factor in our $20k+ debt. Check out my first blog: where I talk about how we paid off that debt. By the time we budgeted for my student loan, the LOC, and my two credit cards we were using about a third of our income just to pay off debt.

Budget Ratio Suggestions:

Here is a common starter budget ratio.

For those that live in a major city your housing cost might be higher, and look similar to this chart.

The most important thing about budgeting is balancing everything.

The chart below is ideally what you want your budget to look like.

The Fun Stuff

That whole budget stuff sounded dreadful didn’t it?! Well it was….but we combated that with planning fun into our budget. We planned creative date nights, and chose specific things we could enjoy that would not greatly affect our budget. I got my nails done every month for $30 and it would last me the whole month without chipping. Amazing right?! We even budgeted for one outing a month out with friends. (If you’re reading this and we didn’t show up to something you invited us to, now you know why lol)

Failure

So with everything that I mentioned above we felt that we were on track to pay off our debt in 24-36months. We gave ourselves some grace because budget fatigue is a real thing. Our budget was very tight. We said no to a lot of outings and after 6 months the budgeting fatigue started to settle in. That’s where we started to go over budget in a couple areas. I say this to let you know that, it’s okay if that happens. When budgets aren’t going the right way, often times the big companies have to make adjustments too. Find money in another category in your budget and get creative on how you can get it to balance.

Saving and Giving

Both of these need to be top priority in your budget especially if you have debt. You should aim to save about 10% of your income and should be doing charitable giving for 10% as well. Saving is important so that if an emergency comes up, you can be able to take care of it. If you do not have an Emergency Fund, try and save up $2k to the fund in the next 3 months or less. Then after that start saving up to having about 3-6months of your income saved. Pre-authorize your savings transfers, so you don’t have to think about it. Schedule them for the day you get paid or the day after. Choose the amount you want to save that month and have automatic transfers every time you get paid.

Giving back should be something that you get into the habit of doing. It feels good to be able to help others. Often time charitable donations come with tax deductible receipts if you donate more than $20. You can claim these with your taxes and get money back at tax time, though that should not be the reason why you give back.

Budgeting Tips:

1. Know where you money is going. Every dollar you spend should have a specific purpose
2. Prioritize saving and paying down your debt
3. Budget for the fun stuff
4. Do not give up if your budget doesn’t balance the first couple times. Keep at it. Find ways to lower your expenses or find ways to make more money. Will talk about this in a future post.

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