Thursday, May 10, 2018

7 Basic Budgeting Tips

I love learning new concepts and ideas, better ways to improve my quality of life, and so on and so forth. Throughout the many self development book I've read, personal finance is a huge aspect in ALL of them. I have taken these past two years (and still taking this time) to really develop my knowledge in personal financing. I wouldn't consider myself an expert at all, but I love that I've been able to incorporate what I've learned into my family life and seen significant results.

I asked a while ago on my instagram if you'd be interested in me creating content revolving this topic. I was surprised that so many of you were interested in budgeting! So, here I am. I know this isn't the most exciting topic but it's a huge part of my life. I'll be sharing some tips and tricks every once in a while, but if this is something you're really interested just let me know! :) Today I'll start with some basics. Making a budget can be overwhelming, I get it. I remember thinking... Where do I even start? Well, I've come up with some very simple tips to help get you past being so overwhelmed.
  1. Percentages: It’s difficult to budget if you don’t have set income. I totally get it. When we weren’t bringing home regular paychecks when Wyatt was a server this was our saving grace. Now, that we’ve gotten so used to it we will always live with percentages. For us that means we live on a “70/20/10” percentage system. We live off of 70% of our income, save 20%, and give (donations/tithing) 10%. This way no matter your income you can feel like you have control on how you spend it.
  2. Goals: Goal setting is vital in budgeting. Whether you're saving up for a house, car, vacation, building your savings account, or putting away money for retirement. Those are all goals to work towards. Write them down, discuss them with your partner, and even set reminders in your phone. Having a "why" for budgeting makes sacrificing much easier. 
  3. Cash: Yup. I use the "envelope system" for all of our spending money. I put envelope system in quotes because I have my own take on it (I'll do a post on that later). Our envelope system doesn’t take account for our necessity or “fixed” expenditures such as; our home, utilities, and gas. That would be kind of pointless to do in cash because they come out automatically. But I use the system for spending I can control such as groceries, dates, babysitter, and anything else in that realm. ****This took A LOT of trial and error. But there is just something about cash that makes me “stingy” haha! I know going straight to cash for most people might be daunting, so my biggest tip is to start slow. Maybe start with just your groceries on a cash budget, then dates, and so on and so fourth.****
  4. Weekly budget: This has been my secret weapon. Most people have a monthly budget, but for some reason we don’t naturally want to transfer that to a weekly budget. I don’t know about you but for me, if I see that I gave myself $400 for the month for groceries I’ll go to the store pile up my cart, and end up leaving the store having spent $200. Then I’m trying to figure out how I’ll make the rest of the $200 last 3 weeks! With a weekly budget I can be more accurate with how my cash is spent. I’m not scrambling at the end of the month and I usually have more than I expected left over.
  5. Slow and steady: I would recommend starting slow and steady into budgeting. Really, when changing any habit slow and steady is key, but especially finances. I know jumping head first can work for some people. It worked for me, but I think you really have to allow yourself time to get used to it. Allow yourself time for trial and error. I read that it actually takes 1 year of 360 times) of doing something to form a habit instead of the “3 week rule” we hear so much about. I've also read that finances are 80% behavior and 20% knowledge. It's all about your habitual nature.
  6. Trial and error: Another huge tip is to know that for most people it's essential to readjust your budget every month.  Think about it… the budget you had for June is going to be different than the budget you have for December (Hello ALL the holiday’s). Try your best to adjust according  to your busy or more/less spendy months and give yourself grace. You're going to make mistakes but those mistakes will help shine a light on your spending habits. Without knowledge of where you are slipping, it would be impossible to fix.
  7. TRACKING!: Tracking can seem tedious, that's the first thing I thought when I started tracking our finances. But when you're tracking anything in life, it brings an instant awareness to unhealthy habits. Again, starting this process slow and steady will help you keep it long term. So, if you want to start tracking your spending try to just start with something small. Maybe how much and how often you go out to lunch or buy things on amazon then slowly implement more ways to track. 
I hope this was helpful for you guys. Again, these are just some basics to get you going! I'll do more detailed posts on our cash system, how we set budgets, how we plan in advanced for bigger purchases, etc! Thanks for all of your input and following along :)