The Art (and math) Of Creating A Budget
Budget.
Unless you are a professional in the finance world, it’s kind of a scary-sounding word. Can I really, accurately plan how much money I am going to need every month? What if I mess up? I have a feeling I'm not unique in that I put off budgeting for years because I was so afraid of doing it wrong and because of previous bad experiences (my parents tried to plan my budget for me one semester in college. Long story short, they didn't realize how much the cost of living- even for a college student- had changed from the 1960’s until the 2000’s. Unless you have a parent who is a certified financial planner, budgeting is something you have to learn to do on your own!).
Financial Peace University gave me some guidance in their workbook, and, while I had to make some adjustments to fit my own life, it was still a good base to work off of. First, I had to make a list of my monthly bills:
-Rent: $830
-Phone: $100
-Utilities: $50 (give or take- it goes up during the hottest and coldest months!)
-Internet: $60
-Gym membership $20 (plus annual fee)
-My sponsored Compassion Child: $38
-Missionary couple that I support: $50
-Student Loan Payment: $150
(Not gunna lie, I had to go back and add to this list several times because I kept remembering things that needed to be added!)
Then, I added things that I have to buy or spend money on every month that I might not get a bill for:
-Food: $120
-Fuel: $120
-Melalueca order (usually includes all my toiletries, cleaning supplies, vitamins, etc): $75
-Pet Food and Supplies: $40 (that's pretty generous but I want to be safe- a pet is a living thing and shouldn't have to wait for my next paycheck for something it desperately needs!).
-Hawaii Fund (my work-friend and I are hoping to spend spring break 2018 in Hawaii, which gives me something to look forward to after this intensive year!): $100
Laundry money: $10
-Tithe: 10% of my paycheck before benefits.
All of these expenses, except tithing (my personal conviction, not a Biblical or church mandate!) are a bit flexible and might be able to be cut back in a tight period, but I’d rather overbudget a bit and have money to spare than shortchanged myself! Of course, it took a few months of sliding these numbers around before I got them right!
And then, the expenses that I get occasional bills for but need to save for every month:
-Car Insurance: $20
-Renter’s Insurance: $12 (I fell behind on this one last fall during my late-paycheck crisis, so I have it set at $20 right now).
-Voice Lessons: $28 (totally forgot this last semester and had to pay for this semester in one big chunk out of my first paycheck).
Once the list was made, I went and purchased a sticky white board for about $10 at CVS and put it on my wall, with a list of all my expenses. I get paid every other week, so I divide everything in half. Every other Thursday night, I figure out my budget before my paycheck is deposited in the morning. Some months I have to include something extra, like last month when I paid a high school student to watch my cat while I went home for Christmas.
Dave Ramsey advocates an “envelope” system where you put your allotted budget for one expense into an envelope- if there's money there, you're under budget. If there's no money, the budget is used up! Doesn't get any easier than that!
I went through and put a star by all the expenses that could be paid in cash and total it up, and then withdraw it from the credit union or a fee-free ATM. If I don't need to carry money for a certain expense with me, like my Hawaii fund, I keep it in a pretty jar- it's satisfying to watch the jar fill up!
Obviously, some expenses have to be paid with a debit card or check, or are set to auto withdraw from my bank account. I really just have to watch my credit union account and make sure the balance matches up with the budget I planned. Thankfully, in 2017, that can all be done from my phone!
In FPU, one thing Dave Ramsey says is, “You’re going to mess this up, and that's okay.” I quickly found that he wasn't joking. The first month I budgeted, I forgot to include laundry money. I ended up doing my clothes in my bathroom sink as putting them on my drying rack on my patio to dry- thank goodness it was summer! Other months, I miscalculated or forgot something and had to make up for it the following month. I’m glad it's “okay” to mess up!
Once I’ve figured out how much I need each pay period, anything left over goes right on my debt. I only budget for my paycheck from teaching- any additional income goes directly on my debt. Obviously, a serious emergency would warrant an exception, but my paycheck from my part-time job doesn't go towards a cute pair of shoes on clearance!
And you know what? It. Makes. A. Huge. Difference. I don't wonder where my money went. I don't find myself thinking, “Oh shoot; I forgot about that bill!!” (At least, I usually don't!). I know I have to hold myself accountable for my spending. And I’m controlling my money, rather than letting it control me! What a relief that is!!!
Debt paid off:
-Regular student loan payment: $149.27
-Paycheck from tanning studio: $150
-Money left over after monthly budget: $105.08
Total Paid off in 2017: $450.17
Average Amount Paid Per Day: $56.27
On track to pay off: $20,539.01
Can I keep this up?? One way to find out...
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