Has anyone taught you how to control your money? Did an adult in your life consistently demonstrate how to tell your money where to go? If you answered no, then this post is worth a read.
There are many ways to budget. You can use google to find different versions of budget spreadsheets, download apps that help you track your money, or you can simply use a piece of paper, a pencil, and a calculator if needed. There are no valid reasons to not keep a budget with all the tools available in our technology rich world.
When it comes to money, it is imperative to work out your budget on payday. Doing this tells your money where to go, gives you clarity on your financial obligations, and helps you avoid stress. Having a car, a house, or anything requires that you put in the time to budget. If you don’t do this, then you might never get to fulfill the “big” items you dream of having.
Let’s talk about the logistics of budgeting on payday.
Steps:
1. Figure out your payday.
2. Schedule 30 minutes to 1 hour every payday for a budgeting session
3. Use your phone assistant to schedule a recurring meeting.
- Try saying “Hey Google, set a reminder for 6:30 pm on date”. Google will ask you for a title or name, go ahead and say “Time to collect bills”.
- Now try “Google, schedule a meeting at 7 pm on date”. Google will ask you for a title or name, go ahead and say “Budgeting Session”.
- Open your calendar to the meeting and select “Repeat”
- Schedule the repeat to match your payday schedule
What should I do during my Budgeting Session?
1. Write down payment dates on your monthly calendar. I recommend using the google calendar to set reminders.
Remember that sometimes payment dates change on credit cards. I suggest you use your bank’s bill payment option or that you set up automatic withdrawals for the minimum payment to make sure you don’t miss a payment and see your credit score affected. Good credit will let you borrow money at great interest rates when you get a mortgage or car.
2. Add up the due payments that are scheduled after your paycheck. This can be done automatically by an excel worksheet if you have the technology. If you rely on pen, paper and your brain then do this:
If you are paid weekly add up the payments for the next week.
If you are paid biweekly add up the payments for the next two weeks
If you are paid monthly add up all your obligations
3. Take your mortgage/rent amount and divide by the number of paychecks to know how much you will need to save to cover this expense.
Ex: $1,200/2 paychecks you need to save $600 from each paycheck
Ex: $1,200/4 paychecks you need to save $300 from every paycheck
Ex: $1,200 need to be saved from your monthly paycheckSubtract the weekly, biweekly or monthly obligations from your paycheck.
4. Whatever is left is your discretionary budget.
5. Think about future obligations that are once a year or twice a year, such as property taxes, birthday gifts, union dues, school supplies, etc. and save for them
6. Designate a “treat” for you for having figured out your budget. You deserve to treat yourself to some fun time or small expense related treat if your budget allows it.
This advice will only help you if you are willing to put in the time to work out your finances. Doing it once and then forgetting to do it for another two months will not work. Consistency in budgeting will make a big difference in your life.
Budgeting will allow you to understand the lifestyle you can afford and which one is out of your means. Living within your means will allow you to stress less by not being overextended. It will also help build a good credit score.
Having a good credit score will provide you the opportunities to borrow money at good interest rates. This means you will be able to buy a car or a home when you wish to take on debt for these two big life items.
Think of the big purchases you want to make in life. Now imagine them drawing closer to you with each budgeting session. On the flip-side, imagine how much farther away they get each time you fail to budget your wages. What would you rather see? Are you willing to do the work? Your money is yours to keep or waste away, so whatever you choose, remember that a budgeting session is the one thing that will help you make your money stretch.
Your life coach,
Kim
