Happy New Year, friends! 🎉One of my New Year’s resolutions is to save more money… easier said than done, right? Budgeting and managing finances is NOT easy, but it’s necessary! Many of us have no idea how much money is coming in vs. how much money we are spending. Budgeting is something that can be intimidating, but once you learn how to do it, it can actually be a little addicting!
Because this is my first post about money & finances, here’s a little backstory: I got my first job when I was 15 (what’s up Dairy Queen!) and have had a job ever since. I’ve had financial ups and downs which forced me to really keep an eye on my spending. After one particular financial low (so low I actually had to donate plasma regularly just to keep my head above water), I vowed that I would never put myself in such a damaging financial situation again. But, as they say, it’s often during our low points where we learn the most!
I started budgeting about 8 years ago and didn’t realize that this is something most people don’t do. I’ve also never carried a credit card balance… something else I didn’t realize most people have never done. So I feel like I’m pretty good when it comes to money and budgeting. This is not to say I don’t have times when I overspend and times when I don’t pay attention to my budget. In fact, that’s been happening far too often lately hence my 2019 resolution. But budgeting is something I have come to really enjoy! I feel good when I save money or when I meet my goals. I thought I could offer some tips and resources to help you get started on creating a budget and managing your finances 😊
First, let’s go over some steps you can take to start budgeting and then I’ll dive into some tips to help you save money.
Create a draft budget
At this point, you probably have no idea what you are spending money on – and that’s okay! The first step would be to find a template you would like to use for your budget. I use a Google sheet and have found a lot of people manage their budget in the same way. And guess what? I’m sharing mine with you! Access it here, download it, and make changes accordingly. In the sheet, I’ve left notes in some of the cells to provide additional clarification (the cells with the little black triangle in the upper right corner are the ones with notes). You’ll need to adjust the categories to fit your financial situation. If you have a question, feel free to drop a comment and I’ll be happy to help!
Get an understanding of your spending habits
This should be step one, but I wanted to provide my spreadsheet first to help you with the categories part of this step. Before you can create a budget, it’s necessary to understand where you are currently spending your money. One way to do this is to print 2-3 months bank statements and add up your expenses based upon the categories in the spreadsheet (i.e. add up all expenses related to gas, groceries, clothing, etc). Next, for each category, you’ll need to find the average (i.e. for “Gas”, add up the numbers from the 3 months and then divide the number by 3). Finding an average is important because you will spend more in some categories during certain months (i.e. “Gifts” in December will go up), and less in other months (i.e. “Gas” will go down if you traveled for part of the month). Some banks will actually provide a year end summary, breaking down your spending for you. After you have your average for each category, you’ll use this number as the base for your budget in the next step.
Fill out your budget spreadsheet
Using the average number for each category, insert those numbers into the spreadsheet under the column “Budgeted Amount”. This will give you an idea of whether you overspending or spending within your means. If after you enter these numbers, you realize that your spending exceeds the amount of income you make, you’ll know you need to adjust your budgeted number for some categories. The results might come as a surprise to you, so don’t be too hard on yourself if you realize you’ve been WAY overspending. We all do, but you’re taking the steps to get back on track and that’s all that matters!
Adjust your budget for the upcoming month
You’ll see on the spreadsheet that I create a tab for each month. After you have an idea of where you have been spending your money and whether you’ve been spending too much in certain areas, you can evaluate how you want to spend moving forward. If your expenses exceed your income, you’ll need to make adjustments until you at least break even. However, keep in mind that the goal is not to break even. The goal is to spend less than you make so you have money left for savings. Keep adjusting your budget until this happens.
Do a weekly check-in
For a long time I would create a budget, but wouldn’t revisit it until the month was over. This became an issue because during the month I couldn’t tell if I was spending too much. I’ve adjusted the spreadsheet for weekly check-ins, meaning once per week (I do this on Sundays), I’ll track my spending and enter the weekly amounts. If I get to week 2 and have already spent my budgeted amount on eating out, this lets me know that I need to either stop eating out for the rest of the month OR adjust money from another category into this category (i.e. if I budgeted for $50 in gifts, but realize I don’t actually need that much, I can move some of that money into another category).
Those are some basic steps to get you started. Again, if you have questions please feel free to drop me a comment on this blog and I’ll help out! Now that you have some steps to follow to get started with your new budget, here’s 10 tips, tricks, and ideas related to spending, saving, and managing your finances:
- Get your groceries delivered. I recently started getting my groceries delivered through Amazon Fresh and it’s been SO amazing! Ordering online helps with impulse grocery shopping (which I am so guilty of doing!). I have my list ready and only order what I need.
- Unsubscribe from retailer emails. If you don’t know about the sales, you won’t shop them!
- Beware of “sales”! BOGO is NOT a deal unless you were going to buy multiple of something in the first place. Sales are sneaky because they get the shopper to overspend while making them think they’re saving money.
- Set up automatic transfers. This is an easy way to start saving money without even knowing it’s gone. I have automatic transfers set up from my checking to my savings account AND from my checking to my Roth IRA.
- Buy generic vs. brand name. This will provide small savings, but small savings add up!
- Follow the 48-hour rule. When thinking about making a purchase over $50 (you could change this amount to whatever you want), wait 48 hours before purchasing. If you still want the item (and it fits within your budget!), go ahead and purchase. Often, you’ll have forgotten about the item before 48 hours is up.
- Make your coffee at home. For a long time I really didn’t like seeing this tip on blogs when I would read about finances, but recently I bought a coffee and realized it needed to be included. Coffee is SO expensive! Invest in a cute travel mug and make your coffee at home.
- Cancel unnecessary subscriptions/memberships. Do you have both Spotify AND Amazon Prime? If so, did you realize you can use Amazon Music for “free” because it’s included in your Prime membership? Look through your subscriptions to see if you could cancel any. Also, do you have a gym at home? If you’re strapped, it’s time to cut the gym membership and start working out at home!
- Utilize apps and add-ons. Ebates and Honey are two browser add-ons I use when I’m shopping online. I’ve saved and made so much money using them! Both add-ons browse the internet for coupons when shopping online while also providing you rewards for spending. I recently got a $60 deposit from Ebates just because I did all of my Christmas shopping online. For budgeting, I love using Mint. You connect your bank accounts to the app and then enter your budget. Throughout the month It’ll tell you when you’re close to your budgeted amount so you can adjust your spending.
- Cut cable! I know – shocking. I’m going to assume that many of you have Netflix, Hulu, Amazon Prime/Amazon Video, or a combination of those. Do you really need cable on top of that? Or, if you have cable but none of those streaming options, I would take a look to see if they can suit your needs/save you money.
There’s a lot to say about finances, but I didn’t want to overload one post with too much info. I hope this blog was helpful and I would love to hear your feedback. What are some of your biggest struggles when it comes to budgeting and managing your money?