Knowing how chapters can sometimes unfold messily, I wanted to create a place where I can share my own life’s journey.
Including all the things that I love AND all the things that I have learned. We can then fearlessly tackle this road called life....together. And hopefully the ending of YOUR story is one of victory...loaded with joy.
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September 10, 2020
Do you feel a sense of freedom or do you feel restricted?
Have you ever thought about why you might feel restricted? Why your defenses go up if someone says ‘let’s go over the budget’ or ‘ how much money did you spend on food last month?’
As a budget counselor, I would meet women who were struggling financially. Most of them were divorced or widowed. We would go over their budgets….or lack of budgets. We would talk through their lack of money and how they got to where they were financially.
In some cases it was not the lack of income that was the problem….it was the excess of spending. I realized that the excess of spending came from a lack of education. As a result, they really had NO idea how to manage their money. $200 in the checking account meant $200 to spend. They never thought about their auto insurance bill coming due in 3 months or saving for an emergency. Is this you too?
One of my personal goals (and favorite things to do) is to educate women on money. And budgets. And saving. And shopping. And saying no. So, let’s get started….
What is a budget…exactly? The dictionary says: an estimate of income and expenditure for a set period of time.
Okay…that is interesting. Let’s say you estimate you will receive a $2000 check next week (for this example all of the taxes have been taken out). And then you estimate that you will spend that $2000. Well duh!
Let’s use this definition instead: A budget is a spending plan based on estimated income and expenses over a set period of time. The period of time is up to you (determined by when you receive your next income).
A spending plan. A plan for your spending. A plan. An opportunity for YOU to tell your money where to go and how it should be spent. Wow – I like this definition MUCH better. Don’t you?
So, how do you even do that?
In order for you to plan your spending you need to figure out your expenses. ALL of your expenses. Food, gas, eating out, child care, hair cuts, rent/mortgage, utilities, student loans, paper products, car insurance, gifts, etc.
You also need to figure out your income – your ‘After Tax Income’ or ATI.
Gather pay check stubs, receipts, utility bills and anything else you can find that will give you an idea of how much you actually spend on a particular category.
After you have those 2 numbers, your ATI and your expenses…
Subtract your expenses from your ATI. If you have a negative number you are spending too much. You should NEVER spend more than you earn. So, you need to adjust your spending.
Using a $1500 example, this would be your bi-monthly budget (twice a month) :
You would take that $1500, plan your budget, and then set aside the money for a 2 week period of time – until your next $1500 check arrived.
Sound easy? Or does it sound difficult? Actually, it can be very easy once you know how to do it and you change your mindset.
Another thing to take into consideration is the purpose of the budget. The purpose of a budget is to keep your spending on track. So that you do not spend more than you earn and so that you have money set aside for insurance payments, repairs and emergencies.
I have always been on a ‘budget’. Many years ago I realized that it was not really a budget….it was more of a record keeping system. Want to know how much money I spent on food each month – I could definitely tell you. But, did I only spend what I had budgeted for food…no way. I would definitely rob Peter to pay Paul.
Meaning, if I wanted a new $100 dress and my clothes ‘budget’ only had $75 in it BUT my car gas ‘budget’ had excess….I would rob car gas to pay clothes…and buy the dress. That is definitely NOT a budget. It is manipulating my money to satisfy my impulsive purchases, my own lack of discipline, and my lack of budgeting properly.
What should I have done….I should have…not bought the dress because I did not have the money in the clothes budget. Or saved a bit more and buy it when I had the money…and maybe it would be on sale too!
I got ya covered here. Most people don’t know where to begin.
Educating women about money is a huge passion of mine. I have many posts devoted to this topic.
PLUS – you can grab my FREE Beginning Budget Pages which also gives you a one time 50% off discount if you would like ALL the Budget Pages. These are the most popular items in my shop.
Big Hugs, Jane