Budget the Bag
Updated: Nov 2, 2021
Let’s talk BUDGETING. You need a budget. A budget is a plan for your money. I use to spend all my money and by the end of the month I was asking myself “Where did my money go"? As I always mention, you can’t address your money if you do not even know where your money is going. I remember one time looking at my transaction history and it said $40 at Burger King. That wasn’t only my WTF moment, but also my wake up call. How am I spending $40 at Burger King, but my savings is empty? Here I am, savings at ZERO, credit cards maxed out, yes I said credit cards with a S, & I can never recall where my money went at the end of the month! I am unsure why I couldn’t of had a wakeup call before I got $10,000 in credit card debt, but it's whatever now. My fiancé gave me a Dave Ramsey book, as if he were saying “here sis, it’s time do better”. Even though he never said that it was time for me to do better. At some point I had to be honest with myself, my priorities were messed up. I read a post on Facebook & it said do not live the same year 75 times. I got tired of being broke and in debt. The best thing I decided to do was take control of my finances by creating a budget and a plan. You do not have to be an expert to take control.
How can you create a comprehensive budget?
First thing first, track your expenses
if you don’t know where your money is going you can’t address it. See where you are spending your money. For one month track your expenses, keep all your receipts. I categorize my expenses in categories such as “eating out”, “entertainment”, “self-care”, “grocery shopping”, and so forth. It helps me create my budget, but do whatever you see fit. Now calculate your expenses, which will tell you two things. What you are spending your money on and how much you are spending. Knowing that you can “plan” your money accordingly and make changes where it’s needed.
Now let’s put it on paper:
Determine your monthly income
Calculate each source of income you have coming in. If you are paid $1200 bi-weekly then your monthly income is $2400. If you are paid $1000 bi-weekly and you bring $500 a month from a side hustle then you are bringing in $2500 a month. I want to take into account every SOLID and FAITHFUL source of income. I know some people factor in every dollar they get, such as birthday money, anniversary money, and etc, but I personally do not because that money isn’t always a guarantee.
Set Saving and Debt Payoff Goals
Now you aware of your how much money you have coming in and how much you have going out. It is time to make saving money and smashing debt a PRIORITY. Treat it as a bill. Let’s see if you overspend, under-spend, or have just enough spend. Do this by subtracting your monthly expenses from your income. If you are under-spending, GREAT. The left over amount can be used towards your savings and paying off debt. If you are overspending or just enough spending then it’s time to do some cutting back, so you have some money to put towards saving and paying off debt. Since you tracked your expenses for a month you are aware when you can cut back. Rather it’s cutting back on eating out, canceling the HBO subscription or whatever. You are going to have to make a sacrifice. For more details on how to plan to smash debt read my blog “A Few Money Moves” and read my blog “Building an emergency fund” for more details on a plan to build a savings.
Break your expenses into three categories: Needs, Wants, & Savings
Since you tracked and calculated your expenses you are aware what is needed for you to stay financially afloat. Now break your expenses into three categories, needs, wants, and savings. Needs are things that are required to live & go about your daily activities, such as rent, car insurance, car note, and so forth. Wants are things that are not needed or things you can go without and isn’t detrimental to your well-being such as cable bill or Netflix subscription. Savings is what you are paying yourself rather it’s into your savings or investment account (s).
Now determine how much you will spend in each of those category
Some people follow the golden 50|20|30 rule, but I go by the 75|15|10 rule (my current bills determined how much I will spend in each category). 75 percent of my income go towards necessities, 15 percent go towards wants, and 10 percent go towards my savings and investing. You can get these percentages by dividing how much you are spending in each
category by your monthly income. If you are spending 85 percent in your Needs, 15 percent in your Wants, and 0 percent in your savings then you need to see where you can cut back on spending to help you save/invest. Maybe you can save on eating out, or getting your nails done, or cut out cable or Netflix. It’s up to you where you want to make adjustments. If those cut backs change your rule to 85|12|3 then so be it, don’t be ashamed. Remember the goal is to start & once you continue to work towards better finances your “rule” is going to change. Just hang in there.
As always you got this! Do not get overwhelmed. Taking control of your finances is a process, especially when you are limited on resources. I have emptied out my savings and went in and out of debt more then I will like to mention, but each time I changed & so did my lifestyle. I noticed my lifestyle, people I had in my life was costing me much money and setbacks. I cut those people and things out (those are stories for another time) & I started flourishing, I still have my hiccups, but not like before. You really do got this, trust in yourself. You are going to get frustrated and maybe even cry, but keep going! Follow me on snapchat @iamsisidevoe and like our Facebook page,https://www.facebook.com/projectrise18