Does the idea of a creating and maintaining a budget make you break out in a sweat?
Do you argue about money or lack of it?
The Budget Coach has some helpful ways to keep your finances in shape.
The first place to begin is to get a sense of your spending. What types of purchases are you making, how are you paying for these things, do you plan for this spending? Begin by keeping a list of your purchases. This can be done throughout your day. Either keep a notepad or electronic notepad with the type of purchase and the amount. If you use a debit or a credit card, keep the receipts. Keep them in a basket by your door. When you arrive home each day, add them to the basket. At the end of the week you can add them up and you will have a good sense of your weekly spending. Weekly spending often includes groceries, gasoline, pocket cash, lunches and such.
Your bills require a different tracking. First, you will need to arrange them as they come due each month. Many bills are a consistent amount and due at the same time each month. Arrange them into a biweekly stack, some due at the first of the month and some due after the 15th of the month. Make sure to check the due dates and date they will accrue interest! Paying your bills on time will save you unnecessary fees and interest. Some bills come less often such as local taxes, water/sewer, memberships, life insurance and such. Keep a calendar to note non-monthly bills such as those that come quarterly or annually. Note how often they come and what months they are due. Now make a calendar page and plot out the bills due on the first half of the month and those on the second half of the month. If you have any bills enrolled in an auto pay from your checking account, do not forget to include these on your calendar.
Tracking both your weekly spending as well as your regular bills will give you a good idea of your expenses. To begin a budget, add up all of your income and subtract all of your expenses to get your net. Ideally you should make more than you spend. It may take some tweaking to get to that ideal net. Do not forget to make a contribution to your savings! If you have more income that expenses, roll it over to the next month’s income. You will need that for the months with quarterly or annual bills. You can also put it to savings in the meantime.
Splitting your bill paying into twice a month will help you to maintain a more manageable cash flow. This also helps with the stress of paying the bills randomly and sometimes being late with a payment. Set up a regular spot in your home to collect and pay your bills. Tracking your expenses and keeping to a budget requires the teamwork of the entire family. Make sure to meet weekly to discuss the coming weekly spending budgeted for the family. This is a crucial step to keep everyone on the same page and to prevent surprises during the week. Make sure everyone understands the cash flow and payment method to use for the week.
Plan for spending
We all have needs and wants. In planning for your spending, you will have to determine the difference between these two things. You need food, shelter, water, electricity as well as some of the creature comforts of day to day life. You need to have yourself and your family properly dressed each day. You need to have transportation to work and school.
Your wants often get mixed into your daily life and are sometimes confused with your needs. You may want a new phone, to go out to eat, to buy that giant television on sale!!! For goodness sakes, you will save $100 if you buy it today! The wants have a powerful pull. We live in an instant society. Take it now and pay us later. Often times, you purchase your wants with a credit card. I would like to suggest that instead of giving into this urge to buy unplanned for items, and never use your credit card for such, you develop a list and schedule and savings plan for these purchases.
Credit cards have become a normal part of our finances. Credit cards are easy to get and easy to use.
You can use them to get instant purchases, automatic payments and even cash advances. In this cashless society, they have become our “go to” in many situations. You can accumulate a balance
very quickly. This balance can greatly interfere with any budgeting you may be doing. Save your credit cards for items such as travel, online purchases and fastlane accounts. You should add these expenses to your calendar as well and make sure you have a zero balance each month.
Last but certainly not least, you need to contribute to your savings each pay period. Ideally, you should be putting away at least 10% to a savings account and 10% to a reserve or emergency savings. In addition to this, you should be contributing to your retirement account. The percentages are ideal and you may not be able to reach them immediately. You can at least begin with the intent to increase your contribution as time goes on. For example, if you get a bonus a raise or a tax return, take that money and put it into savings instead of adding it to your spending. You won’t miss it.
Many clients ask me about college savings. The reality is that young families have a difficult enough time saving for retirement, emergencies, repairs and reserves. While it is nice to set up college savings, leave that for last. Fund the others items first.
The Budget Coach can help you through this process and help you plan a playbook for financial success! It’s time to meet with the Coach! Call now 508-792-9087 or