Is “Budget” a Cuss Word in Your House? -Part 2

Find out how to turn the word budget from a cuss word into a blessing!

So, you decided to work on a budget as a New Year’s Resolution, but have no idea where to get started? Well, you’ve come to the right place!  I’m here to help you get started and to answer any questions you might have about how to make a personal budget, because budgeting is awesome, and the word “budget” doesn’t have to be a cuss word!

Before you get started budgeting, there are a few important things you need to know:

• A budget isn’t set in stone. In fact, a good budget will fluctuate from month to month.
• If you have a spouse, it is really important that you are both working on your budget together. If you’re not, it’s almost impossible to get your finances to work well. Trust me I know (and you can read about my experiences here).
• Be realistic. Just like you can’t suddenly run a marathon when you haven’t exercised in several years, you can’t suddenly go from spending like crazy to spending nothing. If you aren’t realistic, you’re setting yourself up for failure.
• Give yourself a few months of trial and error, as you get things figured out, before you expect to find your groove.

Still with me? 

Great, because a budget is not only imperative in controlling your finances, but it can also be really helpful in strengthening your marriage, as you work together.

So let’s get started:

A budget can be as simple or as elaborate as you want it to be. You can have a spreadsheet on your computer, or you can use a piece of paper, a pencil, and a calculator.  Really, a budget is just you deciding where you’re going to spend your money, so do whatever works best for you.

You’ll want to start with your income for the month. If you get paid the same every paycheck, this will be easy for you. If not, this can be a little more tricky.  For us, my husband’s paychecks vary, because he works 4 days on and 4 days off. So some paychecks will be bigger and some will be smaller.  I simply went back through our bank statements and listed his pay- once I did this, I found a pattern to it: small, medium, large, medium, small. So on any given month I can figure out what our income will be (or at least pretty close). So month one, his paychecks would be small and medium. Month 2 they would be large and medium. And so on.  See if you can find a pattern to your income.  If you get paid on commission or you have an irregular income, check out Dave Ramsey’s advice on how to budget irregular income, by clicking here.

So we’ve added up all our income. Now it’s time for the part no one likes- starting to subtract things.

Personally, I always start with our bills- things that are out of my control on how much they are.  So I subtract:

• Mortgage or rent
• Other housing costs, such as electric, gas, water, etc.
• Other set bills, such as internet, cable, car insurance, phones, etc.

Once you’ve subtracted all of this, it’s time to start working with numbers that are variable- that is, numbers you decide on. Personally, we always start this with groceries, since food is pretty important, and for most people this will probably be the largest variable expense each month.  When figuring out how much to budget, it can be helpful to look at your bank account or credit card statements to get an idea of how much you’ve been spending on each category.

I can’t stress enough that you HAVE TO BE REALISTIC when setting a budget.  If you spent $600 on groceries last month, don’t think that you can suddenly decide to only spend $100.  Either budget honestly with the $600, or say, “Let’s try and make it on $550 instead.”  Take it slowly, so that you can succeed.

You’ll need to think up categories that are relevant to you and your family.  We have quite a few categories, and we use actual envelopes to divide up the money.  Once the envelope is empty, we are out of money in that category.  If there’s something we absolutely must buy, Dan and I will have an “emergency budget meeting” and figure out where to borrow money from- meaning, could we take the money out of our restaurant fund and not eat out this month?- not borrowing using credit or something like that.

Some ideas for categories:

• Groceries
• Fuel
• Restaurants
• Diapers
• Gifts
• Vehicle Maintenance & Repairs
• Home Maintenance & Repairs
• Medical
• Clothing
• Spending

Make as many or as few categories as needed, but make sure they are relevant.  Then start down the list figuring out how much money you need in each category for the month. 

At the end of your budget, you should be left with no money.  What I mean by this is that every dollar of your income should be earmarked for a certain place.  So if you had extra money (congrats- that means you’re doing awesome!) after going through the categories, then you need to start a category for that extra money, such as an emergency fund, or going towards paying off debt. 

If you find that you don’t have enough money to fulfill each of your categories, then you need to go back through them and figure out where you can cut a few dollars.

I’m going to be completely honest: the first few months, budgeting is going to be difficult, and may even result in some irritation with your spouse. But as you figure out what works and what doesn’t, budgeting should get easier and easier each month. 

If you are interested in a more thorough read on budgeting and managing your finances, I would recommend:

Is this your first time attempting a budget? If so, I’d love it if you’d let me know, because I’d like to pray for you!  And if you’ve tried before, what did you find most difficult about the process?

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