Give me a moment to guess where your financial situation is at this moment. … I bet that you have a strict budget set up, but you seem to go over budget every month. No matter how hard you try to stay on budget you just keep coming up short. As a married mama of 3 living on one income, I get it! My family feeds 2 adults, 3 kids, 5 goats, 2 dogs, 1 cat, 2 horses, and some chickens on just my husband’s paycheck. How do we manage that?? You will find several money saving resources throughout this blog, but the post that you are reading now should be your foundation. This post outlines the most basic step to living well on a tight income…learning how to create an effective budget!
You might already have a budget that works, high fives all around if this is you, but I might have a couple of ideas that you could add in to make it more effective, so don’t stop reading!
Create an Effective Budget You Can Stick to
Be Realistic When Creating Your Budget
I cannot stress this enough! I have felt like a failure at the end of so many months because I set unrealistic limits which caused me to overspend in almost every budgeted category. When I give myself $200 for groceries/month for my family of 4 (#5 coming in August) I am just setting myself up to fail. I try not to add too much cushion, but budgeting success only comes when you set goals that you can reach.
Know Your Spending Habits
Keep a ledger for at least a month of all of your spending. Write down every single thing that you spend money on. If you only use a debit card linked to your checking account then you can just review your bank statements for previous months.
Break your expenses down into categories so you can get a good idea of what a realistic budget for each category might be. This is a tough task for some because we want to jump right in to the money saving part, but you can’t get there if you don’t prepare.
Figure Your Income
Do you receive paychecks weekly, bi-weekly, or monthly? Make your budget out accordingly. I have my budget laid out in a bi-weekly format. How much money do you make on each check? Be sure to use your net income here, not what the amount would be before deductions come out.
Figure Your Expenses
At this point, you should have an idea of what your monthly expenses are. Write these expense amounts down into your spreadsheet, notebook, Budget Planner…whatever you are using to keep up. (Note-I am working on a free printable budget planner. When it is complete I will link back to it here.)
Place each expense into a category such as Fixed, Variable, Debt, Donations etc. Payments toward debt might fall into fixed or variable for you. I like to keep this separate (except mortgage) because it is something that I can work hard to get rid of.
I always, always have my tithe listed. God has blessed my family with so much and I am called to be a good steward of everything that he pours out.
A Cash Envelope category is also added to my budget. I take a certain amount of cash out of the bank after our first paycheck so that I can purchase things in this category solely with cash. Check out my Cash Envelope system post to learn more about how I make cash work for us!
Every effective budget has a spot for savings. Set a goal to save a certain amount of money in an emergency fund and then save as much as your can each month until you reach that goal. Don’t stop saving after your goal is reached, though. You might drop back a bit on the amount going into the account, but keep at it!
What Can Be Cut?
You can now see if you spend more than you earn or earn more than you spend. If you need to cut back on your expenses to fit your income now is the time to do it. Do you really need satellite television or a $200 phone bill? You really don’t!
Cut those things out and you will be amazed at how much more you are able to pack into that savings account! Check back in a couple of weeks for posts on ways to cut these things without giving up your television or smart phone. I have done it and I am saving hundreds every month because of these simple changes.
Have Nothing Left Over
Budget.Every.Penny! If you leave extra cash sitting in your account then it isn’t doing you any good. Everything that enters the bank account needs to be accounted for. As Dave Ramsey says, “You’ve got to tell your money what to do or it will leave”.
I know that you can’t know all of the miscellaneous expenses that might come up during the month and that is exactly why I have money allocated to a “miscellaneous” cash envelope. This way the money doesn’t sit around not being used and it doesn’t get used on things of little to no value.
Don’t Give Up!
Trust me, I wanted to give it up too. I felt like budgeting was putting a huge constraint on me and that I would never get it right. It is still a work in progress for me, but now that I have a system in place I feel like creating an effective budget has freed me!
I can buy what I need without feeling guilty because I am pulling from money allocated specifically for what I am purchasing. I am able to save and utilize every red cent that God blesses my family with.
If you need help getting started or support to stick it out, just give me a shout! Email me, message on Facebook, or contact me through my ‘Contact’ page. I would love to lift you up!
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