Budgeting Your Money – The Basics

I’ve always been good with my money. When I was a kid my mom would give me a little bit of money per week and if I wanted to buy something I would have to do so with my own moolah. I learned to prioritize really quickly. If I didn’t have enough to get everything I wanted then I had to decide which thing I wanted most and put the rest back.

The same principle applies to budgeting your hard earned money as an adult. Sometimes you have to sacrifice something you really want for something that you need. You have to live within your means. That’s just how the cookie crumbles.

I’ve always known how much money I have in bank, what my bills cost and what money is coming in. Just recently in the last year though I’ve started actually setting monthly limits for myself in an effort to save extra money. I write down every. single. penny. I try to use only credit cards for better tracking and rewards points {more on this next week}. This way I know exactly how much I have spent. There are of course other ways to budget if you are not a fan of credit cards. I will also discuss those next week.

We will keep this post simple because I don’t want to overwhelm you with what can be an extremely long post. Let’s start with the basics.

1. When making a budget for yourself, figure out how much you make per month (if you are paid bi-monthly like I am, just take an average).

For example: If you make $10 per hour and work 40 hours per week, then you make $400 per week gross income. $400 x 4 weeks average per month is $1600 per month. Of course, this is not what you actually bring home. In Illinois I find that if I subtract 25% from my total, I get a pretty accurate amount of what I actually bring home.

If you make a salary or get paid every other week, then it’s easier for you. Just multiply the amount you make per check x 2 and you’ll have a monthly total.

2. Budget only 90% of your income. Pretend that you make only 90% of what you actually make when considering your total take home pay. That way if you have an emergency or an unexpected cost, you have 10% of your check still fluid and available.

3. Take a look at your bills. Make a list of everything that you pay for each month. This list should include: rent, utilities, gas, groceries, entertainment, any monthly subscriptions like Netflix of Hulu. Add them up. This number should be less than the number you came up with in #2. If it’s not then it may be time to re-evaluate. Maybe you don’t use your cable as much as you thought you would and you can change your plan or eliminate it all together. Maybe you use fewer minutes on your cell phone than you thought and can adjust your plan accordingly.

4. Whether you are trying to save money for something specific or not, it’s a good idea to set money aside every month for your savings account. If you don’t have a savings account you should go open one ASAP. I like to save a certain dollar amount every month, but you may want to save a percentage of your income. It’s up to you which way you do it, but you should do it!

5. Speaking of a savings account, you need to know what accounts you have and what money is in each. If you’re single you should have at least a savings and a checking account. If you’re married, then you and your spouse should be on the same page about your accounts. Whether you have separate accounts, joint accounts, split the bills equally or divvy up the bills, as long as the both of you know what you’re spending and what is expected you can make it work. I’ve read a bunch of different articles on what types of accounts you should have – I’ve seen up to seven! I say just do what works best for you and your family. For us for example, it’s one checking, one short term savings account and one long term. That may change down the line, you can always adjust your accounts as your needs adjust.

I hope it wasn’t too much information to take in at once. As always, if you have any questions, either leave a comment below or email me at quarterpastnormal@gmail.com.

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