Tips to Budget Like a Queen

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Okay, so I have a accounting degree and for the past 11 years I’ve worked on the annual compilation of a university budget.  I can build a budget for our household like a boss!  The thing about budgeting is you can make anything work on paper.  There will be some give and take and there will be some sacrificing.  In the spirit of my 2017 mantra, waste not, the real trick will actually be staying within the budget, while also setting aside funds for things we really want to do over the next year or so.

Today, I thought I would share some basic principles for budgeting.  No, this is not some earth shattering new method I developed, but I did spend some time rounding up some information already out there which I find to be solid.

Tips to Budget Like a Queen

First, this is just common sense, but living within your means is a must.  While this is such an easy concept, I spent so many years in my youth living way, way outside my means leading to large credit card bills and so much stress over how it would ever be paid off.  Even when we did manage to scrape together a vacation, I couldn’t fully enjoy it because I was concerned the entire time with every penny we were spending on food, outings, etc.  Hello Shelly, save enough money to pay for the entire trip before you leave!!  I really never thought I’d see a day of debt free living and even though I never missed a payment and didn’t ruin my credit (even worse because the credit card companies just kept raising the limit!), I was only making minimum payments and still spending.  Sadly, I lost my daddy way too early but what he left me enabled me to pay off all of our debt and I vowed to never, ever let it happen again.

Let me also just preface this by saying, unexpected things happen that are sometimes out of your control.  Sometimes even when you are doing everything right and living within your means I realize it could only take a medical crisis, a death, a lost job to create a negative financial situation.   This guidance, is for someone living in a healthy situation and choosing to make the right choices to secure a positive cash flow in their future.

You don’t need a super savvy budgeting software to track your budget and expenses. Pen and paper works but can be cumbersome.  I use microsoft excel and download all of my transactions several times a month and assign to categories.  If you follow Molly, she has a series over the years, Molly’s Money and this post shows the spreadsheet she uses which is similar to my approach. Quicken is probably a software most of you have heard of as well and it might be a better solution for you. Most importantly you must track everything.  Yes, even those cute heels you hid in your trunk from the hubby!  I reconcile to our bank account every 10 days or so.  Full disclosure, I still use credit cards every single month for almost every expense we have, but I account for every one of the transactions in my reconciliation as if the money is already spent as to not end up being “short” the funds to pay in full each month.  I do love earning miles on my CC so I have found this beneficial for now.

Second, you do need to know how much your net income (what you bring home) is each month. Keith works in sales which means the majority of his pay is commission based so no two paychecks are the same.  If you have a situation like this, average a reasonable period such as 6 or 12 months and use that as your monthly base.

Next, accounting for all your fixed expenses such as your house payment/rent, utilities, phone, etc. All those things you have commitments for each and every month.  If your children are involved in activities with monthly dues I would also add that here.  You can’t live without food right?  So identify a food budget as well.  I personally separate our groceries and dining out because it’s eye opening some months to see how much we spend eating out. These are all the things you need each month.  I found this article which suggest a good rule of thumb for needs should be no more than 50% of your budget.

My mom always told me to pay myself first!  That was really, really hard to do when I was broke but my goal is to set aside at least 10% every month in savings.  Dave Ramsey would tell you to work to build enough to cover 3 to 6 months of expenses in case there was an emergency such as a loss of income.

What’s left?  Well, you have your wants remaining.  Like I mentioned last week, spending zero on frivolous items is probably not very realistic for me.  Setting an amount I can spend each month will give me a little freedom to feel like I can have a little fun but accountability of staying within that amount will help us set aside money for bigger things.

Other considerations for monthly budgeting include charitable donations/tithing and also set asides for things like car maintenance and registration, home repairs and of course a little nest egg for those future vacations.

Having a record of where we spend totally saves me when we have a tight month because I know exactly where and how we typically choose to overspend.  As I head into this year of wanting to waste not, it is important to take a close look.

Once you have this down the next step is accountability!  If you are anything like me this means not just to yourself.  I need someone else to know the plan and help keep me accountable and call me out when I overspend.  I’m the money manager at our house and Keith is perfectly content just letting me handle things but I would really like us to have more time together reviewing all of our expenses.  I totally think if I knew he would be looking at the detail I would think twice before I hitting the checkout button!

So do you keep a monthly budget?  I can’t wait to read everyone’s methods!

Linking up with The Blended Blog for the “Nuggets” linkup!  You can find a complete list of prompts for January/February here.

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