It’s been a few weeks of warmer weather in most parts of the world + as we are each stepping our toes back into the swing of things, I keep hearing the same thing over and over. Outside costs way more than anyone remembers lol. So I dont know if things have gone “up” in price or if it is the fact that we have been home so long not making unnecessary day-to-day purchases, but either way, now is the time to get a budget if you don’t already have one.
Truth Moment: I’ve used the word “budget” very loosely pretty much my entire adult life without even truly knowing what it was or how to use it.
Six months ago, if you asked me, I would most definitely say that a budget was a framework of restrictions telling you what you can + can not buy lol. Sounds legit, right😅? In actuality, a budget is a tool that helps you to become more intentional about where + how you are spending or saving your money. When I started to understand that the foundation of any good budget started with intention, then it made more sense to me on how to create a budget that worked along side the things I wanted more of in my life.
Mindset shift: “Intention” over “Restriction”
Whether you are a pro at budgeting or brand new to the game, the same as anything else in this life, for a budget to truly work you have to understand your WHY or have clear intentions of your purpose. Having a why helps you to take ownership over the decisions you make about how, where + when you spend your money. Money is energy + if we protect our energy by watching where we spend it, it makes complete sense to have that same mindset when it comes to money.
Building a Budget
Where to start
- For the most part, building a budget starts with how you are already spending. If you don’t have clear idea of where your money goes (this is extremely common), start by tracking your expenses without changing your normal routines or activities. Note: Sometimes tracking just a week or two of spending can be sufficient, but if your weeks vary, I suggest tracking at least a month’s worth of regular spending to get the clearest picture of where your money goes during the month.
- Categorize what you have tracked. Group together like expenses such as reoccurring bills that are the same amount each month; examples: rent/ mortgage, car payment, insurance etc. Note: Placing expenses in categories helps you organize what is consistently due +when as well as those expenses that can vary from month to month, like groceries, entertainment, gas or eating out. Warning. The categories don’t lie, they will tell you exactly where you are spending your money. This step can be a little bit of a shock because often times what we think we spend vs what we actually spend are two drastically different amounts.
- Calculating income. Depending on what you do for a living, your income could vary. The same as tracking your expenses, take the time to also calculate your proposed income by placing them in categories (Actual vs. Proposed) Note: For my entrepreneurs, freelancers + 1099 crew, write down your best guess-estimate. I personally like to underestimate any freelance projects verses over-guessing the amount.
Sprinkle on the Intention
- Do the math. Take your monthly expenses verses your calculated actual income and see where you stand. Note: This part can also be tough, looking a the big picture of what is coming in verses what is going out.
- Decide where you would like to spend your money and time. If eating out is super important to you, look at your bigger picture are you eating out enough or are there things you can move around to add more outings to your life? If you really want to start traveling, does your bigger picture leave room for saving or do you need to let go of some excessive shopping? Contrary to belief there is no one way to budget and there is no wrong answer when deciding what is important to YOU.
Experiences YOU want
I made a decision at the top of the year. I decided that I would spend my time and MONEY on experiences that furthered my happiness. To do that, I had to be crystal clear about what experiences actually made me happy; that was the first step in creating my budget. My second step was finding a method of budgeting that worked for me.
Use the Resources!
There are TONS of budgeting apps, notebooks, software and so forth all geared towards different approaches to being intentional with your money. My biggest suggestion is to try a few methods to see what realistically feels doable. Trying out different approaches is super important because this gives you an opportunity to see what works for YOU, this is all apart of setting yourself up for success.
After trying a few different approaches, I have finally found my personal sweet spot! Im currently use a combination of MINT app + the Budget Planner from Bloom Planners. For me, this combination of digital + handwritten budget journal helps me hold myself accountable while helping me remember my WHY before I even make a purchase.
What methods are you using to stay happy and in budget?