Whether you're single or in an LTR, money is something that will always be on your mind, at least every Friday. Many people growing up in my generation and younger do not know how to budget (frequently people in my parents generation do not know how to either!) Budgeting is very easy, sticking to it is difficult. However, as Dave Ramsey, financial expert says, if you fail to plan, you plan to fail. If you want to achieve your goals with your money, it is absolutely necessary. So here it is, Sadie's Budgeting 101 Class!
No matter how you get paid, whether it is weekly, bi-weekly, bi-monthly or monthly, budgeting is at its essence, the same. If you get paid weekly, that's the money you have to work with for that week. If you get paid bi-weekly, divide the amount in half, you get half the amount by week. So if you get paid $400 bi-weekly, you have $200 each week to spend. Do NOT overspend! You must be disciplined! Put it in a savings account you don't have quick access to, give yourself cash, do something to ensure you plan properly and set yourself up for success. Next, take a look at the bills due during this pay period. Have your bills listed somewhere that is easy and accessible to you. I have mine saved in my Google Calendar. It can also be on paper, or wherever you want it, make a system that works for you. List every single bill, utility, payment, subscription you pay. Some of mine are:
- Google Play
- Car Insurance
- Child Support (Mr. Dunham's, not mine!)
- Dentist Bill
- Dollar Shave Club (highly recommend, btw!)
- National Grid
For the pay period, either weekly or bi-weekly, subtract the bills from your paycheck. I have a rule that for large bills, (anything over $90) I spread over two or three paychecks. For instance, our car insurance is $116.00 so I divide that by 2 and save half during one bi-weekly period and the other half comes out of the next bi-weekly paycheck. That way I'm not taking a $116 hit out of one pay period. Depending on your situation, you may want to spread it out over more weeks or maybe you can bankroll it from one. Its about creating a system that works for you. Experiment a little, see what works best. Your budget plan will change after you have put the plan in place because implementation will teach you how well the initial plan works or doesn't.
Once you have your bills and utilities theoretically paid, next move to the essentials. My essentials are:
Tithing at church
Mad money (this is fun money I can spend on whatever I want, Starbucks coffee, nail polish, new shoes I want but don't need, etc.)
Subtract all that from your total. If you still have money left over, you're in the green! If you don't you're in the red. Go back and adjust things. Maybe you need to break up a payment into smaller segments, or lower your mad money allowance. Maybe you can't afford that beer run this weekend (I'm looking at you, Mr. Dunham!) Work and re-work your budget until you're green. I like to leave $100-$150 cushion in my checking account, as a just in case. Just in case of what? I don't know. Sometimes Mr. Dunham wines and dines clients and it takes a week or so for his company to reimburse him. This cushion is how I ensure we won't be overdraft in our checking account.
If we have more than that cushion left over, there's also a plan for that. The excess, even if its just $20, goes right into the savings account. It doesn't get spent. It isn't free or found money. It gets transferred right into savings. Let's say we got paid $800 in one pay period, but there was a balance in our checking account of $350. After all bills, utilities, essentials, and cushion, there's a surplus of $175 left. That $175 gets transferred.
This is your most basic budget. It really is this simple! The hard part is implementing it. Its really just a matter of self-discipline. Every Friday (or whenever you get paid, the traditional day is Friday) make a plan for your money for the next week or two. Make yourself do it that day!! I've put it off a day or so before (many times) and then before I know it, we're getting paid again and our money had no plan (aka it was wasted).
Some other helpful tips:
Set everything you can up on auto-pay! Its so great to not have to remember to pay things or send out checks. Our Google Play, Dollar Shave Club, child support cell phone bill, and electric bill are all on auto-pay. The institutions pull the money when they're supposed to and all I have to do is write it in the budget. Our bank automatically sends out checks for child support. The only checks I write on a weekly basis are to the church for our tithing.
Track your spending! You will be horrified at the money that slips from your hands when you're not watching it. When we first started budgeting, we calculated we were spending an extra $900 a month on coffee, dates, energy drinks while at work, clothes we wanted but didn't need, alcohol, etc. And to think we were befuddled because we thought we didn't make enough to save money! We were partying with it!
Our family doesn't believe in using credit cards or taking out large loans for cars. As a result we do not have car payments and we do not make credit card payments. Some will argue that this helps build your credit and its true, however Mr. Dunham and I, like the rest of America, fell into the trap of using credit cards for everything. If you can honestly just use your credit card to buy gas or a soda and repay it at the end of the month to build your credit, go for it. Most people can't do that and end up heavily in debt. Just be forewarned. (Also, I'm not going to debate the de/merits of credit card debt and auto loans, so don't waste your breath in the comments. I'm just telling you what I do.)
Whether you need a new car, to pay off student loans, live at home or whatever, you need to be saving. If you say to yourself, "I'm 19, I don't have anything I need to be saving for," save anyway Your future self at 28 will thank you (I wish someone had told me that at 19. Learn from my mistakes!)
Whether you use credit cards, have an auto loan, get paid weekly or bi-weekly, once you begin intentionally spending your money and planning your savings and spending, you will not have to stress about "Can I afford this? Can I not?" You'll know. Try it out! If you have a question or feel I missed something, please ask! I hope you enjoyed this post!