Confession time: I’m obsessed with budgeting.
Yes. Not only am a planner nerd, I’m also a budgeting nerd.
I was never a fan of math class in school. I majored in journalism, so I was only required to take one math class in college. I certainly didn’t take any extra math classes for fun.
A couple years ago, I was added to a budgeting group on Facebook with a Dave Ramsey focus. For some reason, it caught my attention, and I became completely obsessed. I created a budget and then the budget got more serious and then I created a spreadsheet so I could play with the numbers in my free time. I started regularly listening to Dave Ramsey’s radio show, and my husband I enrolled in Financial Peace University at our church.
Remember how I said I didn’t like math? I have NO idea what happened! For some reason it became really fun when I started thinking of the numbers in terms of being debt free, buying a house and living comfortably. (And, of course, buying #allthestickers.)
In preparation for the new year, I thought it would be fun to share some of my favorite budgeting tips. Most of these ideas can be attributed to Dave Ramsey.
This post is not sponsored, I’m just a big fan and these financial principles are truly helpful.
Start with your BIG goals.
The most successful budgets aren’t focused on what you’re giving up; they’re centered around the goals.
Before you even get started, think about WHY you’re budgeting. Do you want to pay off debt? Do you want to pay cash for a car? Do you want to buy a house? Do you want to retire early and travel the world?
Dream BIG and focus on that dream, because it’s the secret to making everything else work.
Figure out what you have been spending.
A little warning: if you’ve never set a budget before, this part is probably going to hurt a little.
Go through a recent bank statement and figure out where you’ve been spending. Make a list for each category (groceries, gas, eating out, etc.) and add every purchase for an entire month to a list. If you don’t have a category that makes sense for a purchase, create a new category!
Once every purchase is listed, add up your lists to find out where you’re money has been going.
Set goals.
When I made our first serious budget, I started with the list of categories and what we had been spending on based on our bank statements.
My husband and I went through each category and discussed whether or not we could spend less in that area. Some of the categories were RIDICULOUS. Seriously, why would anyone ever spend that much on eating out?
As we talked our way through the list, we set an amount that we wanted to spend in each category.
But, be realistic.
When you’ve just talked about your goals of buying your dream house, it’s easy to say you’re not going to eat in a restaurant or buy a new outfit until you’ve moved in to that house. But in real life, you forget to take your lunch to work some days, and clothes wear out.
Your budget will be more successful if you plan for your real life. Instead of skipping an eating out category altogether, budget $20 or $50 to account for the days you forget your lunch.
Give yourself permission to have fun.
Along those same lines, you should plan for a little fun. It’s kind of like dieting: the more you deprive yourself, the more likely you are to splurge when you fall off the wagon. If you plan to treat yourself a little, you’re less likely to go crazy later.
In our budget, we have a few fun categories: His fun money (for my husband), her fun money (for me) and eating out on weekends (for date nights).
These are the most flexible categories in our budget. Some months they’re bigger; some months they’re smaller.
Budget every dollar.
This idea was kind of hard for me to grasp at first. If I budget every dollar, then what happens when something I didn’t plan for comes up?
The thing is, if you fully embrace this idea, it will work, because you’re planning for those unexpected situations.
So, here it goes: Start with your income, and while you’re making your budget decide what you’ll do with every single dollar.
This doesn’t mean you spend everything. Instead, it means after you’ve budgeted what you’re going to spend, you make a plan for whatever is left. Maybe you’ll pay extra on your debt to get rid of those payments sooner and avoid interest. Or, maybe you’ll put the extra toward savings or an emergency fund.
Whatever you decide, the important thing is to make a plan for every dollar so there’s not “extra money” just sitting in your account. If you think you have wiggle room with your budget categories, you’re more likely to overspend.
Use cash.
It’s generally easier to overspend when you’re using a card. For the budget categories where it makes sense, take out cash on payday and tell yourself you can’t get more when you run out. When your cash is gone, you’re done spending! It’s a simple way to keep yourself accountable.
If you’re wanting to get serious about budgeting in 2017, I would definitely recommend checking out his book Total Money Makeover, Financial Peace University or listening to his radio show. He has so much more to teach than I could ever share here!
