7 Tips For Budgeting Success
Budgeting is so important in order to save money and stay out of debt.
Budgeting is so freeing when done correctly, because it allows our money to go further. And though we hear this time and time again, it really does give us permission to spend. When we budget, we know how much money we make and can therefore assign it to different categories of our budget. We can have as many or as little categories as we like. We just have to make sure that the amount of money coming in, does not exceed the amount of money going out.
Here are some practical budgeting tips we can use in order to save money and not have any debt:
1. Recognize your challenges
What are some of the challenges you are having now regarding finances? Is there any debt? Is more money going out than coming in? Do you feel you have more bills than income? Let’s take a hard look at our finances and observe current or potential issues that come up with our finances. If none come to mind, let’s go back and look at our bank account in order to get a more clear picture of what financial issues are lurking in the background. If we have never done this it may seem scary. However, if we know the issue we can surely fix it but if we ignore it the bigger it could become.
2. Determine your goals
Decide what is important to you and your family in regards to finances. Now that we have recognized those potential issues in our finances, we can begin to select some goals! This part is super exciting because it helps us to visualize where we could be with a little time and a lot of focus. Select the goals that are important to you and your family but please, do not select too many at once. It’s harder to feed a bird with two scones (no birds were harmed in the making of this blog post 😊). When we focus on one or two goals, we can reach them much faster than when trying to tackle 5 or 6. Do you wish to get out of debt? Building up an emergency fund? Are you saving for a car or a down payment on a home? Paying down your mortgage? Select one or two (the most crucial one first, if possible) because we will reach our goals at a slower pace when we divide the income to try to reach both instead of going all out on one goal.
3. Follow a system
Select a system that will work well for you and your family. My family and I follow the Dave Ramsey system. (By God’s grace) it has helped us to get out of over 50 thousand dollars of debt, save a fully funded emergency fund. Save for a down payment on a home. Buy a 2nd vehicle, invest 15 %, save for the boys college and we are currently working on paying down our home. This system works super well for us because it gives us clear steps (in order) to follow. So no need to overthink or over complicate things. I will put some links about the Dave Ramsey system in the resources (below this article), if you are interested in learning more. I super enjoy the Dave Ramsey, I think it is wonderful and I highly, highly recommend it. However, the best system is the one that works for you and your family.
4. Know your income and expenses
Figure out how much income you and your family are bringing in as well as how much you are spending . This is very important in order to make your budget. If we don’t know how much we are spending, it will be nearly impossible to get a handle on our finances. And if we don’t know how much income we are making then we won’t know how much we can safely spend. My family and I follow a zero-based budget and this really works for us because every dollar has a job. A zero-based budget is when the amount of money that comes in is equal to the amount of money that goes out. Every dollar has a name. From rent or mortgage, to food, fun and savings; everything is included in the budget. As long as your income equals your outgo you are good to go. I will add a link about zero-based budget in the resources as well. But first, start by calculating your income. Look at pay-stubs if you get them, or if you do freelance look at your bank account and see exactly how much you make on average (over the past 3 months). Use this number to know how much you will be able to spend. Next look at your expenses. Don’t change anything just yet, just look at your bank account and add up the amount of money you and your family are spending (again for the past 3 months). Now you have a starting point. Are the expenses higher than the income? Or is it lower or equal to the income? If equal you are good to go (using the zero-based budget). If higher or lower you might want to make some adjustments.
5. Make the budget
So now that we know our income and our outgo, we get to make a budget! This part is also really fun because we get to be super creative. We get to select certain categories that work well for us and our families. First, let’s begin with the non-negotiables, the four walls (as Dave Ramsey calls it ) if you will. These include: food, utilities, shelter and transportation. Let’s make sure we have enough for our families to eat (if you want to get out of debt or are saving for something I have a YouTube video on how to save over 1,000 dollars on groceries you can check it out here https://www.youtube.com/watch?v=ea-CQR0z8NM as well as a blog post here https://www.buildsherhome.com/blog/7-easy-ways-to-save-money-on-groceries ). We will also want to cover utility bills such as light, gas and anything else along those lines. We also have shelter which includes rent or mortgage so that our family may have a place to live. It does not have to be the largest, swankiest place (I have a family of four which include two growing boys and we live in a 1150 square foot home). Just a warm place for our families to live will do. Finally, transportation, this can be anything from a car to a bike to even pubic transportation. Anything we can afford, that fits in our budget in order to help us meet our goals as quickly as possible.
Once we have those covered we can then begin to add everything else. If you are a Christian (Or Jewish) please, let’s not forget to tithe. Everything we have is because of God, so really it all belongs to Him. Tithing is only 10 percent of our income, so if we make only 100 dollars it will be 10 dollars to give unto the LORD. It is all His, so it could have been 90% of our income; but it is not, it is just the 10%. If I began to write here all of the blessings my family and I have received once we began to tithe, I would not finish writing today or tomorrow. So please, pray about it, give it in faith and see what happens (Malachi 3:10 , Mark 12:17). Next, we will include other things that are important to us and our family. But let’s remember our goals and incorporate them heavily into our budget. My family and I follow Dave Ramsey’s 7 baby steps (I will link them in the resources), We are on baby step 4, 5 and 6 our budget mimics that.
Once you have added all of your categories, check what the total is. If the expenses exceeds the income, reduce something that is not part of the four walls. This is only temporary. If the income is more than the expenses you might wish to add more towards your goal (i.e. getting out of debt or saving for an emergency fund). If the income equals the expenses you are good to go!
6. Check in with your budget
Now that we have made the budget, we are going to want to check in on it periodically. At least once a week, to make sure we are staying on track. If we do this we are a lot more likely to stick to it. We will be able to catch things on time and see if adjustments need to be made. For example, if we spend more on groceries let’s say we will now reduce the supply money or something that makes sense for you and your family. So, the budget can be adjusted if we begin to derail from it, but please don’t. Let’s be sure to stick to the budget as best as we can. Let’s remember our goals and even select a reason why we are doing this to help keep us motivated. If we don’t follow our budget we will get further from our goals and get discouraged. If we do this, we might not see progress and give up altogether. If there is a certain category that is giving us a hard time to stick to, then let’s use cash envelopes instead. Or we could leave our debit card at home. Whatever we have to do to stick to our budget. We got this!
7. Make next month’s budget
To stay ahead of our finances, let’s make next month’s budget ahead of time. Now that we have our budget and we know our goals, we should make our next month’s budget. Let’s keep in mind however, that we are not copying and pasting last month’s budget. Things change every single month. From events, to holidays, to bills to even having reached some of our goals and needing adjustment. We might also find ourselves making more money. So every month, the last week of the previous month, select a day to make the budget. Preferably the same day every single month so that we do not forget, or we could program it into our calendars or planners. But let’s make sure to get this done. If you are married, select a day that works for both you and your spouse and get together to do this budget meeting. Make sure you are in agreement because a house divided cannot stand. Be on the same page you are a team! My husband and I play rock, paper, scissors in order to make a decision we are not in agreement on. Feel free to use that or what ever works for you and your spouse. Dream together, pray together if you are a believer, select goals together and most of all work together.
I pray that these tips will help you and your family as much or more as they have helped mine. Follow these budgeting tips to help see a drastic change in your family’s finances. You got this! 💛
Resources
Reduce grocery expenses by over 1k -
https://www.youtube.com/watch?v=ea-CQR0z8NM
The 4 walls -
https://www.ramseysolutions.com/budgeting/4-things-you-must-budget
Dave Ramsey’s 7 baby steps -
https://www.ramseysolutions.com/dave-ramsey-7-baby-steps
Zero-based budget -
https://www.ramseysolutions.com/budgeting/how-to-make-a-zero-based-budget
The cash envelope system -
https://www.ramseysolutions.com/budgeting/envelope-system-explained
