Klara Woldenga (Graphic)
If you haven’t yet, you may find it beneficial to read this column before the budget guide.
The first thing you need to do before you start is to get a pen and a piece of blank paper and place it on the table. Next you will need to pull up your big person panties and sit down in front of it with your set of priorities grasped firmly in your hand. You are about to have the important moment of personal honesty. It is time to structure a monthly budget.
It will do you no good to lie or delude yourself at this point. This is the time where you lay it out exactly the way it is, so you can get a clear picture of where you’re at, which will help to show you what your options are going forward.
The budget will have four sections to it: static bills, flexible bills, non-essential bills and income. Don’t worry, it’s not as complex as it may sound. First make a list of your static bills, these are your payments that do not change in anyway and have to be paid every month. This would include things like rent, car payments, cable and cellular bill.
The next column will be your flexible bills, which would be things that you need to spend on every month, but there is not set amount. This column would include items such as groceries and gas. Use your best guess to ballpark this figure, as this will be the section that you tweak to balance your budget.
The non-essential bills is the column where you put things that you don’t actually need to survive. This is the reality check folks, and where you need to refer back your list of priorities. If you don’t have the money, then you don’t get to do it. Examples include a gym membership, as well as movie and bar nights. You won’t even need to look at this column until you’ve ascertained if there is money left over for these activities.
The income column is where you list your monthly income, after taxes. In the case of student loans, you will need to take the lump sum of what you have left after you’ve paid your tuition, books and any other fees. Divide the rest over the number of months you will need it to stretch. This will give you a monthly amount to create your budget with.
Add up your two main bill columns and compare the results to your take-home income total. Your income total must be equal to or more than your combined bills. If this is not the case, then you must go back to the flexible bills column and play with the totals for things like groceries until it is set at a realistic amount.
Next, take your nifty little accordion folder and, using the sticky tabs that are provided with it, mark a place for each one of your flexible bills. At the very back of the folder you will list your non-essential fun money expenditures. If there is no money left, these spots will stay empty.
From now on you’re going to leave it to your bank account to pay your static bills and you’re going to put your bank card away. You will pay for everything else like groceries, gas and beer with cash. Put the assigned amount of cash into the designated spots of your accordion folder and each time you spend, you replace the money with a receipt. This is extremely beneficial at the end of the month, because if you run short at all, you can go back and look at things you spent frivolously on. It’s also interesting to go back and add up how much you actually spent on groceries as opposed to what you thought you spent. At the end of the month, if you have any money left over in any of these spots, you can bundle it up and put it into a savings account that you may only access if you physically go to the bank. Even if it’s only $20, do it. It adds up over time, and before you know it you’ll have enough for a trip to Mexico or a new pair of shoes.
If you get paid every two weeks, then you will need to put half the amount in these spots twice a month. This will give a clear picture on an ongoing basis of how much money you have. It’s a great way to avoid accidently running out of money, because you are able to see clearly how much money you have at all times, as you get closer to the end of your budget time. There are also other added bonuses, like no more extra bank fees, NSF charges or the infamous $2 charge for using the wrong ATM machine. Seriously, that adds up; pretty soon you’ve paid a couple hundred bucks in a year just because you use your debit card a lot.
Budgeting does not have to be a scary thing and can actually be a pretty empowering process. It’s a crucial step to obtaining and maintaining financial security. You do not have to have a lot of money in order to be financially secure, but you do need to know how to track it, spend it and above all, know how to say “no” to yourself.
