How to Create a Budget for 2019 & WHY You Should
Introduction and Background:
I’ve always been pretty smart and aware of my money and spending habits. Though, I’m not going to pretend like I don’t spend (and sometimes blow) A LOT of money. This post isn’t going to be a cookie cutter budget for just anyone, because everyone’s situation is different and everyone has different interests for their money. However, it is an important topic to address and it REALLY helped me to actually sit down and write everything out.
To be honest, I’ve known for a while that I was spending too much money on online shopping and eating out. But when I actually sat down and added up all of those expenses for a one month period, I was a bit ashamed of myself. Now, with that said – I will never be the kind of person who will cut those types of expenses out completely (Lord willing). I (personally) have plenty of money left over to indulge in those activities every once-in-a-while. But I was getting a bit out of hand and it needed to be addressed. Here is why:
It’s no secret that I travel a lot (lol). I consider traveling my hobby. Some people hunt, some people race cars, whatever… I travel. However, I can’t continue to travel constantly AND continue with the same spending patterns that I had grown accustomed to before I was traveling this often. And that is the point – I added expenses, without cutting back elsewhere. Your money problems may very likely look different than mine, but the core problems are pretty consistent.
My Personal Set-Up & Things to Know:
- First off, I use a bank that has great online-banking features. I never go into an actual Bank for any reason at all.
- I run EVERY purchase that I make through a credit card to earn points (free money, people!!), and I simply pay it off each month via my paycheck. I’ve done this since I was 17 years old. And obviously, you must be very aware of your purchases and make sure that you can pay everything off if you want to implement this feature. I personally use an airline credit card because of how much I fly, but I’ve used several Bank of America credit cards in the past and I’ve been very pleased with them.
- I have 2 checking accounts and 2 savings accounts (and have for a while), but I haven’t been utilizing them with purpose or strategy. I will outline how I plan to utilize them into my budget below.
I made a 3 column list labeled Income, Savings, and Expenses.
- Under Income, I obviously wrote down how much I make or receive each month.
- Under Savings, I wrote down how much I wanted to save each month. I personally separated my savings into 3 different categories:
- Yearly savings – I wanted to set aside enough each month to cover my yearly tax costs, the cost of owning my website, and Christmas presents for 2019. I added those total costs up and divided by 12 to see how much I should set aside each month to cover a year’s worth of those items.
- General savings– I chose to try to set aside $300/month in a general fund. Obviously, the goal is to save as much as possible, but I can pull money from here as needed if something came up. This can be as low or as high as you want it to be, but I would definitely put some amount here each month.
- Travel savings– Clearly everyone might not need this category, but it’s likely that you have some kind of hobby or a specific goal that you would like to save for. I added up all of the expenses for trips that I already have planned for next year and figured how much I needed to save each month for those specific trips.
- Under Expenses, I tried to list all of my expenses in different groups. Again, your groups might look different from mine – but I’m going to share them with you for reference.
- Church Tithing (10% of my paycheck)
- Amazon Prime
- Phone Bill
- Car Payment
- Gym membership
- Groceries (estimate)
- Gas (estimate)
- Random – I simply wrote $100 to cover this
- Dogs, unexpected things, etc.
Once I had all of the figures written down, I took the amount for monthly income and subtracted my total amount for monthly savings. Then from there, I also subtracted my total monthly expenses to get my “left-over amount.”
That left-over amount is what I am allowed to spend on online shopping, eating out, random travel, activities, events, etc (because that’s where I choose to spend my money at this point in my life).
Also, I am also allowing myself to pull from the “general savings” to cover Travel opportunities that may arise unexpectedly (when necessary). Because in this business, I am constantly expanding and adding to my calendar. However, I didn’t want to leave it all in the left-over category because then I am almost guaranteed to spend it. By at least attempting to set it aside, I will be less likely to spend it on a monthly basis.
How am I going to stay on track?
To track my expenses, I plan on getting a tiny notepad to keep in my purse (at least in the beginning). I’m going to make a page for all of the categories that vary from month to month (like groceries, gas, random, and my “left-over” amount) and try my best to write down each purchase that I make. I might not do that forever, but I think that it will help me to keep a visual reminder of what I’ve spent so far in the month, or where I need to slow down.
To be consistent with my saving, I have already set up monthly automatic transfers from my main checking account to my other accounts that I’ve set aside for each saving category.
And again, WHERE you spend your money may be totally different from me… but the concepts for any budget are the same. I hope this helped you in some way to take a look at your own finances. It’s never a fun thing to have to do, but I felt SO much better after doing it. So thanks for reading “How to create a budget!”
Until next time,
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