PART TWO: MAKE A BUDGET
It’s been a week. How’s that no-spending thing going? Well, here’s the good news: You can start spending money again. Of course the bad news is that after today’s assignment, you might not want to. Hopefully last week’s exercise started you thinking about the reasons WHY you’re spending and also got you to start making a serious distinction between the things you WANT and the things you NEED.
(NOTE: If you are new to “Through The Eyes Of I” or missed out last week, you might want to start at Budget 101 Part 1: STOP SPENDING before starting this week’s assignment!)
Before we go any further, I want to make a quick but important distinction that just because something is a “WANT” instead of a “NEED” doesn’t make it wrong or bad. It’s okay to want a pretty comfortable house with all the amenities, vacations or cute shoes. What’s not okay is to want all those things at the expense of your financial well-being, your marriage, relationships, your children or anything else that we know is more important than stuff. It’s okay to WANT, but not to GET if you are not at a stable financial stance to do so. ***Don’t go on vacation, then come back and not pay your electric and gas bills. Don’t go out shopping with your friends and then go and tell your family you’re struggling*** If you are not struggling with your spending or find that you have plenty of money leftover for your savings, life & retirement accounts at the end of the month, have no trouble paying all your bills on time, know exactly where all your money is going, have great credit and don’t stress out over unforeseen expenses, then you probably don’t need to be reading this series. In fact, you probably could write it better than me because you are obviously doing something right. I have multiple bills including a retirement and savings account, life, funeral and health insurances that I pay towards monthly, and I don’t have school or credit debt so I say I am pretty financially stable BUT…… most of us, including I struggle with money or budgeting, at least in some area. Believe me when I tell you there is plenty of room for improvement. This week’s assignment is going to require a little more effort. The hard truth is that no one can fix your budget for you. There are no magic solutions or ten-minute fixes that will have permanent results. Improving your financial outlook will require change, and change is HARD. Do it anyway.
HERE IS THIS WEEK’S ASSIGNMENT:
1. Assess your income and fixed expenses
Print out the nifty budget worksheet above, then grab your bank statements, your bills, your check register, & any other financial information you can think of. A calculator might come in handy too. Then grab a glass of wine, sit down (with your spouse if your married), and start crunching the numbers. Use worksheet number one to list all your sources of income, as well as all those key fixed payments you MUST make each month
2. Create a budget for your variable expenses
Use a pencil to fill in each category with what you are currently paying each month, then add up your subtotals and see how it compares to the number you are shooting for. Then go back and lower different categories as necessary. Obviously some things, like your water and electric, won’t be adjustable, but other things can probably be cut significantly. Include SOMETHING in your savings budget, even if it is just a small amount. If you have credit card payments, include those in your household expenses as well.
3. Take some time to self-reflect
This step may be the hardest, but it is also the most important. Complete worksheet #4 and make some concrete decisions and goals based on what you’ve discovered through this budgeting exercise.
Maybe you’ve realized it is time to cut up your credit cards, or, at the very least, put them on ice. (Fill a bowl with water, put your credit cards in, and freeze. If nothing else, it will slow you down!) Maybe you’re ready to start packing a lunch instead of going out or to give up cable. What you spend your money on is a very personal decision that only you can determine for yourself (or with your spouse.)
4. Track your spending
The last page of the PDF packet is an expense tracker. Print out as many as you need, and use it to keep track of everything you spend. At the end of each day, and then again at the end of each week, go over your expenses to make sure you are staying on track. The more frequently you “check in,” the less likely you will be to let your spending get out of control. Little things add up quickly!