Really, do you? Most people hate the word “budget.” There are a lot of words that people hate, and often the government will just give things a new name. Let’s give this a new name. Instead of a “budget,” we’ll call it a “spending plan.” That’s really all a budget is anyway. So, do you have a spending plan?
If you don’t, you should really think about making one for yourself. Having a spending plan gives you control over your money. Whether you have a lot or a little, it’s important to control it and not let it control you. If you think you are in control of your money, ask yourself these questions:
- Do I know how much money I have right now in my wallet? My bank account?
- Have I ever wondered “where did that $20 go?”
- Do I ever run out of money before payday?
- Do I ever pay bills late because I don’t have enough to cover them?
- Do I ever purchase something that I do not need and do not use…. or maybe that I do not even like?
If you answered yes to any of these questions, you NEED a spending plan!
Spending plans can be made in just 5 steps.
- Keep a record of your spending. Take out a notebook and a pencil. Write down these categories:
- Housing and utilities
- Household supplies
- Car plus insurance
- Child care and child support
- Recreation and personal goods
- Medical plus insurance
- Credit payments
- Other – gifts, church, school, sales tax, etc.
Every day, write down what you spent in the proper category. To make this process easier, keep your receipts. At the end of the month, total each category and then total the entire month’s spending.
Now think about those things that don’t happen every month- like property taxes, dentist visits or car repairs. It is important to remember to save a little each month to cover these things as they come up.
- Look carefully at your spending. When you see what you spent your money on for the entire month, all broken down into categories, you might notice that you are spending more than you thought in one area or another. Write down or highlight the categories that seem too high.
- Decide what to change about your spending. Now that you can see you are spending too much each month on clothing or eating out, you can make conscious choices to spend less in those areas. You are already gaining more control over your money!! See? It’s not hard and it isn’t painful, either!
- Stick to your plan. Once you have decided what habits to change, it is time to write down how much you are willing and able to spend in each category for the month. And you must stick to it! Yes, there will be months when you have to spend a little more on gasoline than you had planned, but maybe that month you cut back on something else- like clothing or fancy coffee drinks.
- Look at your plan regularly. Maybe you are consistently needing to spend more in a particular area-month after month. It is okay to adjust your plan to account for that. Just remember, that the ending dollar amount needs to be the same- because you probably won’t be making more money just because you need to spend more money!
Following your spending plan can help you to stay afloat or to reach some financial goals. One financial goal I have is to buy some new living room furniture and I would really like to have a new oven/range combination. Without a spending plan that includes saving for these things, I will never be able to purchase them. Without a spending plan, most people- myself included- would never have any money left at the end of each month.
Stay tuned. Throughout the next few months, I am going to be sharing some ideas for saving on utilities and at the grocery store!