I may be crazy. I know it’s a car, but I swear mine has intuition. It knows exactly when I have a little money built up in my savings, and it is at that moment that it decides it needs a trip to the mechanic.
Statistics say that 8 out of 10 American workers live paycheck to paycheck. That’s a whole lot of us, and yes, I count myself in that group. So I’m pretty grateful the car at least waits till I have the money before being greedy and taking it all.
I need to know where every penny of my money is going each month. One of the tools that I absolutely cannot live without is a monthly budget. If you are in the same situation and don’t have one, it’s high time you sit down and take a really hard look at your finances.
I know there are apps that will help you with this, but pen and paper still works as well. The act of writing it down helps keep me aware so when a friend invites me to go out or I see something in a store, I can make a responsible decision.
So let’s make a budget!
Below I’ve given you a list of income and expense suggestions. I only included those I thought were relevant to my audience. For instance, I didn’t include alimony as an income source. Who the hell even gets that besides former spouses of celebrities?!
First, list out all your monthly income. Include any/all of the following, consistent sources of income:
- Wages from Primary Job – list what you actually bring home (net income, not gross income)
- Child Support
- Side Hustle – any income from a secondary job(s). (Babysitting, house sitting, part-time-minimum-wage-have-to-make-ends-meet job, etc.)
No cheating here, list out EVERYTHING. If you aren’t honest in your budget there’s really no point in even going through the process.
Some things to note. If you have big expenses, for example, you pay your car insurance every six months, divide that payment by six and include the monthly amount in your budget. Then when it comes due, you will already have that money saved up.
Also, include expenses for things that are month specific. If you know you are going to get a gift for your dad’s birthday, go ahead and budget in how much you’ll spend. If you know you need to get the oil changed, put that in the budget as well.
The more thorough your budget, the less likely you will be surprised by a shortage of funds.
For things like gas and groceries you will have to make an educated estimate. Make it realistic and strive to stay within what you have budgeted.
Here are things to include:
- Household Repairs
- Home Repairs
- Home Maintenance
- HO/Renters Insurance
- Household Items/Supplies
- Car Payment
- Parking fees
- Car Registration
- Oil Changes
- Car Repairs
- Car Maintenance
- Auto Insurance
- DayCare/After School Care
- Pet DayCare
- Pet Supplies
- School Supplies
- Private School Tuition
- Tithe/Charitable Contributions
- Monthly Subscriptions – Magazines, Apps (Spotify, Pandora, etc.), Online Publications
- Gym Membership
- Medical Bills
- Dental Bills
- Health Insurance
- Salon Services
- Credit Card Payments
- Personal Loan Payments
- Student Loan Payments
- Gifts – Birthday, Anniversary, Wedding, Christmas, Special Occasion
- Entertainment – Games, Eating Out, Vacations, Netflix
- Property Taxes
Now subtract your expenses from your income. If you have a negative number, you are in some deep shit, my friend. Call Freedom Debt Relief right away!!
If you are lucky enough to have a positive number, this is all the money you have to “play” with for the month. Get this number in your head and remember it whenever you are faced with a decision that requires any spending outside of your budget.
During the month, I write down every expense that I do make and adjust the “play money” balance accordingly. That way I always know how much I have left.
If you have credit cards, I strongly suggest you get this “play money” balance in your head and don’t pad it with any available credit you may have on credit cards. If in the past you have not been the best at doing this, it will be both challenging and empowering.
Once you have everything laid out before you, figure out if there is any way that you can do any of the following:
- Is there anything you can live without or possibly reduce the cost? (Do you really need Starbucks each morning? Can you call around for quotes to see if you can lower your car insurance?)
- Pay more than the minimum payment on credit cards and personal loans, even if it’s just $5 extra
- Put some extra funds into a savings account to be prepared for unexpected expenses
These are baby steps toward getting out of debt, which should be your number one priority. It won’t go fast, but at least you will be making progress.
So what about you? Do you have another method for tracking expenses each month? Tell us about it in the comments below. You’re method may resonate with someone and help them get a grip on their finances.