Balancing A Budget For Beginners
First off, I want to thank Ben from Dynastus for giving me the opportunity to submit this guest post. Ben asked me to provide some insight as to how a beginner can start a budget while still keeping a good healthy family balance.
Budgets are near and dear to me because I have found the extreme amount of value in them. However, I am all too familiar with the bad connotations associated with budgets because I have not always been a believer. Before I started doing a budget, I felt budgets were extremely restrictive. I felt a budget would no longer allow me to “live” and I would forever spend my life working and making my own soap to save money.
The truth is, I could not have been more wrong. Quite simply, a budget is a plan for my money. It is a simple set of instructions that I give myself on a monthly basis in order to fully benefit from my earnings.
The Early Days
Before I utilized a budget, I would spend my money on whatever I wanted. I did not plummet into debt, but I spent every penny I made. Due to this, I had little to no savings, but I wasn’t in deep debt. Because of my lack of debt, I didn’t think I had a problem.
After my wife convinced me to start a budget, I realized how wasteful I was being. I spent 40+ hours a week working to make an income, and I was throwing away about $1,000 a month eating out at restaurants. Don’t get me wrong, I love eating at restaurants, but eating out was not adding $1,000 worth of value to my life.
My wife helped me learn that a budget was empowering and a great way to ensure I spent my money on what I truly valued. For my family, we love experiences more than material things. Before I used a monthly budget, we went on an occasional vacation but we did not have enough money to go on all the vacations we wanted to.
Every cent adds up. Remember, the power of growth beats income.
The All Seeing Eye of a Budget
After creating a budget, I found that I was wasting thousands of dollars on junk and meaningless habits like my morning coffee. I love my morning coffee, but I found that by making my coffee at home I could save over $100 a month. This may not seem like much but I do not miss spending that extra money each month to make the Starbucks CEO any richer.
This began a whole new way of looking at things. By cutting out the wasteful spending I was doing out of habit, I was able to focus my money on the things I truly value in life. Because of a budget, we now are able to go on 3-4 vacations each year and pay for them in cash.
I cut out cable TV, got rid of my expensive car payment and bought an older vehicle, and swapped an expensive gym membership for a cheaper one. I now pack my lunch each day and save a ton of money each month. With all these cutbacks, I can honestly say I don’t miss any of my old splurges.
That’s the thing about a budget – it teaches you about contentment and seriously focuses your money on what YOU decide really matters in your life. If you don’t like vacations but instead like fancy vehicles, using a budget can focus your money so you can pay for that expensive vehicle in cash. Can you imagine not having a vehicle payment? I haven’t had one for 7 years and let me assure you – the extra money is nice!
Hopefully, by now I have been able to convince you that developing your own personal monthly budget is extremely important. If you’re ready to jump on board and take control of your finances, I would encourage you to head over to my in-depth article on budgets and get your free budget printables on my site.
The Short of It
For a readers digest version, in order to start a budget, you need to do the following things:
Find out how much money you make each month.
- Go back over your past couple of months and estimate your average income. If you work on commission such as a waiter or waitress, take your last four months of income – total it up and divide by four. This will give you the average amount of money you bring in each month.
The next step is to write down your monthly expenses.
- These expenses include the things you pay for on a monthly basis to include: rent/mortgage, electricity, gas, food, vehicle payments, internet, memberships, phone, water, and any other recurring bill you have.
After you have written down your fixed expenses, look at your variable expenses.
- Variable expenses are anything that is discretionary such as eating out, entertainment, clothing, and other items that you purchase on a monthly basis.
- Add up your monthly expenses and see how it compares to your income. Hopefully, you are bringing in more than you are spending but if not, you have your work cut out for you. The idea is to see on paper what you actually spend your money on each month. From there, you can decide what you can live without and where your money should be going.
Develop A Plan.
- After you have made your cuts, decide in advance how much you are willing to spend on food each month. Decide how much you are willing to spend on clothing and entertainment. After you have made your decision, stay with it! If you need help staying within your boundaries, a cash budget may help as well.
Again, I have a much more detailed article on budgets on my site, but this will hopefully get you motivated to start creating your own budget that works for you and your family! I encourage you to continue your financial journey and listen to Ben. By working with a budget, you can start your plan to get out of debt and invest with Ben’s advice.
If you are tired of living paycheck to paycheck and are done dealing with financial stress, then make the decision to change your life. It all starts with the first step and making a plan that sets you up for success. If you don’t control your money, your money will control you!
Keep learning my friends, you work too hard to be this broke!
Quick note from me, Ben:
Just wanted to thank Ryan a tonne for his input with this post. If you feel a budget is a good fit, you should jump over to his site right now and get a hold of his resources for free(and what’s better than awesome stuff for free?).
I haven’t ever had a strict budget myself…but know full well the power of having one for most people. So, I asked Ryan to create this post as he is the budget expert and it was only right I bring the best content creator for the best audience. 🙂
Thanks again Ryan