Personal Finance Blog

The Dreaded Budget

My momma always told me that it doesn’t make any difference how much money you’ll earn in life, you’ll always need a budget.  Fast forward a (eh, umm)  few years, and I have to admit, that has been true for me.  I’ve had minimum wage jobs and jobs earning considerably more, and when I’ve tried to work without a budget, my finances have turned into a gigantic mess!

I’m certainly no different, better, smarter or wealthier than any of you.  I am middle everything — middle-aged, middle-income — you get the idea.  I’m not a personal finance guru, or a Ph.D. in (something or other) Finance.  I also don’t subscribe to hoity toity, over-the-top technical jargon when it comes to managing money.  What I do offer is practical, no-nonsense, (and maybe most important to you) free ways to get your financial ducks in a row.

Now, I don’t believe that ‘budget’ has to be a bad word.  Sure, it doesn’t always conjure up the most fun-filled experiences I’ve had in life, but when I’ve used a budget to meet personal financial goals, I have been terribly proud of myself for following one.  What kind of goals you ask?  Well, I’ve made room in my budget to save for new furniture and a new car.  I’ve paid off outstanding bills, and “doubled down” on others to get them under control, or pay them off.  I’ve paid off ferocious credit card bills with wicked high interest rates.  And I’ve learned how to consistently add to retirement and college funds without killing myself.

If you’d like to fulfill some of those personal financial goals yourself, the place to start is with a very simple, workable budget.  Why bother with the ‘workable’ part?  Well, sometimes managing your money is hard.  Maybe you had to take some unpaid days off this month or your refrigerator went on the fritz or you really need a weekend away from it all.  Budgets have to be flexible enough to match your lifestyle.  If the budget is too tight, you won’t follow it; if it’s too loose, you won’t reach those goals.  Think of it like an unrealistic diet — not enough food and you’ll dump it the first chance you get — but if you can eat chocolate cake sometimes, it’s more likely you’ll stick with it and actually lose weight.  Same idea.  So here goes.

The very first step in building a workable budget is to collect the basics, and I mean the very basics.  Here’s what we’ll need to get started:

  1. Your take home monthly income.  Add up everything that is paid to you on a monthly basis, whether it comes from your employer, an insurance company, the government, or a friend.  These are the actual dollars deposited into your checking account, or the amount paid on the checks written to you.  It all counts.
  2. Your actual monthly expenses.  If you’re like me, these numbers sometimes get away from me — what I remember them to be 3 or 4 years ago isn’t quite what they are today — so take a look:

If today is pay day, today is a great day to start.  Instead of putting off any bill paying, pick up those bills and record how much money is really scheduled to be paid out.  The numbers don’t lie.  Are the payouts what you thought they would be?  Or, are they way more than you thought? If they are less than what you thought they would be, you either already have a great handle on what’s going on with your money…or you are an excellent guesser!

After collecting all of this information, we’ll take a closer look at our expenses.

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