The Dreaded ‘B’ Word – Budget

March 25, 2016 Quiver Full Farms No comments exist

Most people quiver when they hear the “B” word. Maybe you’re scared to try it out, maybe you have tried it and failed miserably, or maybe you don’t like feeling restricted. No one likes feeling “tied down.” So today we will conquer our fears and talk about the dreaded “B” word … budget.

Why I love having a budget

Keeping a budget means that I get to spend money! That’s right! I get to spend my money! Since I know how much money I make every paycheck I can even spend it before I even have it!

A budget doesn’t limit or place restrictions on me, it frees me to spend my money on exactly what I want. I’m not stuck at the end of my paycheck wondering where my money went, I know exactly where it went.

How to start your budget

I personally use excel to keep track of my budget but a pen and paper will work just as well. But before we get into that, we need to know 2 things:

  1. How much money do we bring in every pay period, and
  2. How much money goes out every pay period.

It’s that simple!

Income

When we say the word income we are talking about how much you take home every pay period on a regular basis. This may only include your paycheck but may also include any amount of money that comes in on a regular basis. For me it includes:

  • The money I make from selling some of our farm products on the side
  • The money my sister in law pays for her share of our phone plan
  • The amount that my company reimburses me for internet usage

Starting to get the idea?

Outgo

Your outgo is everything that costs you money during that pay period. This includes the big ticket items such as your mortgage, utilities, credit cards, groceries, tithe, etc. It also needs to include some of the smaller or less frequent items that you know about ahead of time/

These known items may include:

  • Christmas
  • Birthdays – for your family and friends
  • Hair cuts
  • Clothes
  • Pool chemicals if you keep a pool
  • Car repair and upkeep
  • House repair
  • Emergency fund

This isn’t sounding fun

Don’t worry, the fun is coming. You also need to budget for fun. Having fun is important. If you don’t budget for fun you will feel deprived. You will fall off the bandwagon and  come to resent your budget. Fun items may include:

  • Eating out
  • Allowances – they aren’t just for kids ya know!
  • Vacations
  • Your hobby
  • Whatever fun is I for you

OK, I know how much I make and how much I spend, now what?!

Can you add and subtract? Good. That’s all the math you will need. We just need to make sure that what you spend is not greater than what you bring in. Let’s look at a totally made up example. These numbers are nowhere near real numbers but it should give you the basic idea.

Let’s say you bring in $1,000 a paycheck.

Let’s also say you have budgeted the following (per paycheck). These are totally made up numbers to make it easy:

Mortgage $300
Utilities $100
Internet $50
Car Loan $200
Clothes $10
Tithe $100
Haircuts  $10
Emergency Fund $100
Credit Cards $30
Car Repairs $30
Eating Out $40
Total $970

So with simple math:

Income – Outgo = ?

Your income for the pay period was $1,000. Your outgo is $970 so:

$1,000 – $970 = $30

Therefore we have $30 left over at the end of the paycheck! Hooray!

That’s all I have to do?

Yeah, basically.

I like to run with about $30 left over in my account just in case I forgot something or miscalculated. The $30 is basically a buffer for me. You don’t want to large of a buffer though because that money could have been spent (budgeted) on something else such as growing your emergency fund or paying off a debt.

Start your budget today!

Start your budget today and take control of your money instead of letting it taking control of you. I am including a free budgeting spreadsheet for all my nerdy tech people out there. Feel free to tweak it as needed and don’t forget to leave any questions or comments you may have below.


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