So my mom sent me links to watch this lady on YouTube, and I invite everyone to watch a few of her videos. She covers food grocery trips, meal plans, general spending and general questions. She has student loans and a tight budget (plus she's funny). Or.. Check out Youtube while you're there for millions of other budget videos and tips.
Before watching her, I went to a new bank to take advantage of a 3% 90day GIC they have available for a limited time last week (since extra money is better in my pocket than my other banks), and the advisor I got was really impressed with how financially secure I was at my age. Both BudgetGirl and this bank interaction has led to this post.
Make a budget. Everyone. Know where you have the money to spend, so you know when you shouldn't be spending any more.
This topic came up with my best friend who wanted to get a car. His current budget didn't really allow for a car (it did, but basically only for the yearly insurance cost and nothing else). In order to afford a car, he needed to rework his budget and his numbers. Does he cancel his gym membership or his soccer team playing fees? Does he cut out eating out completely instead? Does he get a second job instead? All of these and more were things to consider.
While I'm giving some back stories, let me say that I have no debt other than my mortgage. This for me is an accomplishment at only 26. I have a car, a house, a dog, completed renovations with a new roof+furnace+air conditioner+water heater+finished basement, a fiancé.. And I am able to eat, drive, work and play without debt. It is all thanks to budgeting (and couponing in part).
My dummies guide to budgeting is a simple starting point. Read and Google all sorts of others, because having more to work with can never hurt. When I was getting started, I read everything I could and researched researched researched.
Another good tool for me was Gail Vaz-Oxlade and her "life pie" I think it's called. This is a great guide for everyone, not just people who are in debt like her shows suggest. Her life pie tells you what percentage of your income should be going where at max.
If your numbers in one area are out of whack, you need to adjust the other areas to balance. She's a huge promoter of the budget binder and the jars/envelopes method. She has a TON of resources on her website and she's a great first stop
http://www.gailvazoxlade.com/resources/interactive_budget_worksheet.html
http://www.gailvazoxlade.com/resources.html
So, a budget? A budget is simply a way to manage your spending and not go into debt. It takes your income and divides it into quadrants of life to make sure that you can eat, drive, live and save, without spending money you don't have.
Start with tracking your spending for 2-3 months. 1 month of spending might not get every bill you have for the house, or every expense like shampoo you don't need that month. Write everything down. Literally. Just write down what every single penny of your spending is going to. And don't just say "$2.00, gas station" write down what it was. There are a lot of apps that you can track this info in, but even just opening your notepad on your phone might be easiest. At the end of this time (or the end of each month), sit down with either an Excel spreadsheet or a big piece of paper, and start transcribing all of that info over into columns: Food/drink, fixed housing costs (you can't change them like the mortgage amount), variable housing costs (like the electric bill), transportation (from the CAA card to bus tickets), entertainment (eating out tends to go here), baby/child/pet costs, home decor/Reno, savings (generic saving, retirement savings, automatic deductions), and you can change these depending but I usually call them Bath & Body (like hair products, soap, shavers) and Home Essentials (toilet paper, cleaners, tin foil, etc).
Total up your columns and then look at anything else you haven't figured yet.... For me I literally went through item by item what I would need. Like a car, in a year I would need wiper blades, oil changes, tire rotations, new tires every few years, new lightbulbs every few years, car cleanings, gas weekly, windshield washer fluid, CAA emergency roadside, insurance, license plate renewals and stickers, replacement parts/fixing/just in case fund. I googled the numbers for these items and wrote them in my budget. I did the same thing for the house, outdoor maintenance, the dog, myself, my health (what is and isn't covered by my work), gifts and birthdays, what I normally spend at Christmas, vacations, work-sponsored donation days, etc.
Look at other website budgets too for anything you might have missed. A good starting point was this post. http://www.midgetmomma.com/2015/01/15/20-things-you-are-forgetting-to-put-in-your-budget/
Take your $ numbers and scale them up to show a year. If you buy gas weekly, x52 weeks. If you buy shampoo once every three months, x the number by 4. If you need tires every 3 years, take the cost and divide by 3.
Once you have a final number in every category, divide it by 12. This will give the average cost of that column by month, and this is what you should be squirreling away each month to afford that item later.
There is a TON of work that can be done here, so make sure you budget (hah, get it) a bunch of time to do it right.
Then look at your income. Is it fixed? Variable? Different income types will call for different budgets in some cases, but I always suggest you have some sort of fixed income portion - maybe that's a paper route or a couple evenings burger flipping, but at least have some sort of predictable every month income budget amount. Write down the "take-home" pay, this is after the government takes their cut and the employer takes out the employee benefits information, and is what you actually have to work with. Maybe you have side jobs and eBay moments, great! But for the budget I would suggest sticking with some sort of concrete number you can bank on, so to speak.
Add up all the columns in your tracking sheet, and compare that against your take home income. How far out are you? Look at Gails life pie and calculate the % numbers to see where you are spending too much money. She divides stuff into fixed expenses (things you can't change the payment amount of ) and variable expenses (everything else). If your fixed expenses are too high, then you have a hard decision to make of either generating more income or changing where you live/what you drive. Typically, everyone's variable expenses are way over budget too when you first make the budget.
Work with the life pie idea and your income. How much should you be spending in each area? Work backwards if it's easier and then compare against your current spending.
Then.. Cue the couponing aspect. If your variable transportation costs are too high, consider asking for CAA or wiper blades for your birthday. Think about carpooling options, buying gas in the middle of the week, home washing and cleaning. Where can you save money and eliminate it from your budget?
I know this was a long post so I'll leave it here for now. Get creative, do the research, ask for help. Especially if you have debt, you absolutely need to budget to be able to pay it off and avoid paying all those extra and unnecessary interest fees. Feel free to post any other good tips you have :)
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