As a busy mama of 4, my time is very limited. More often than not, so is my money.
When my husband and I first got married, we were gifted Dave Ramsey’s Financial Peace University by our pastor and his wife. We went through the course only to flunk miserably because we just weren’t ready to commit (to the budget, not the marriage 😉 ).
If only we had known then how important actually living by a budget is.
Creating a budget doesn’t have to be hard. It’s very simple to do. However, living by a budget is another story. That takes hard work and some serious looking in the mirror.
I may not be able to change your ways, but I can help you at least get started.
Why Make a Budget?
If you don’t tell your money where to go, it just goes wherever you feel like it at the moment. Then you look up, and it’s all gone, and you have no idea where.
As fun as it seems to be at the time to just live without restrictions, I have learned the hard way that it will get you nowhere.
And when you bring kids into the picture, you owe it to them to provide financial security. Now, I don’t mean that you have to be “well off” to be good parents, but parents who are stressed over money all the time aren’t exactly a ball-of-fun to be around. Just sayin’.
Not to mention, how much is your peace of mind really worth???
Think of it as a liberation instead of a restriction.
Most people who have planned out a budget and started living by it report feeling like they got a raise. Because every dollar has a job to do, you aren’t constantly looking for ways to pay for things. You already have that covered.
It’s an awesome feeling actually.
Kids need new ball cleats? Got it. School clothes? Done.
No more worries.
Now just to be totally transparent with you, for the first month or two, you may not feel like this completely. Odds are you may be trying to make sure that you get everything caught up and squared away so that you can get your budget 100% on track.
Since you are having to pay a little extra to do that, it may seem tighter than normal at first. At least it did for us as we had to double up on a few payments the first month.
And MURPHY…. Let’s not forget about him! Murphy is the killer of all things joyous. Ever heard the old saying “If it can happen, it will”? Well, meet Murphy.
He tends to show up when you are really trying to get off to a good start. He has an uncanny resemblance to a transmission that has just kicked the bucket, a burst hot water heater, a nail in the tire, or a central heating unit that goes out mid-winter.
We are not friends.
But he always shows up at the worst times. Just be prepared.
Funny thing is, he doesn’t come around near as much once you have a little money set aside. Hmmm… Wonder how he knows?
OK. So on to the good stuff.
What are the steps to actually making a budget?
1. Track all your spending for an entire month.
The best way to do this is to evaluate your bank statements from the last 2-3 months.
And don’t forget things that are irregular such as trash collection which we pay quarterly.
And don’t cheat. Count everything. Yes, even that Dr. Pepper or pack of gum. It all counts. Every penny.
You have to be honest with yourself to see exactly where your money is going.
2. Figure your income.
Add up all sources no matter what they are. Nothing is off limits.
Paycheck, child support, income tax refund, side hustle. The list goes on and on.
3. Write down all of your necessary expenses.
Start with your absolute necessary things first; think housing, food, transportation, childcare, utilities.
4. Write down your debt payments and unnecessary expenses.
Think credit cards, cable, etc.
5. Look for areas to cut back.
Do you really need that $179 TV package? I mean, you only watch 3 channels. Think about it.
6. Be real with yourself
If you have a large family, don’t budget $300 a month for groceries. It’s not realistic.
It’s really tempting when you first start budgeting to want to make it bare bones so that you can save (or snowball) as much money as possible.
But making your budget unrealistic is only setting yourself up for failure later.
If you aren’t meeting your goals, you may begin to feel defeated and quit.
7. Schedule payment dates according to your pay check schedule.
For example, we get paid twice per month, so we had the due dates on most of our bills changed to coincide with these dates.
On payday, we pay all of the bills that are due until the next payday.
8. Set up regular budget meetings on a schedule that works for you.
Make this happen regularly even if you are doing this solo. It helps you to stay accountable.
Set aside time to sit down as a family and discuss everything that’s coming up during the next budget cycle.
We do ours twice a month, on or near payday. So twice a month, we look at our income (because it varies) and all expenses that have to come out before we get paid again.
9. Use the envelope system.
Your money’s not gonna take care of itself.
Now it’s time to take action.
Determine how many of these items are coming directly from bank draft.
Making sure to leave enough money in the bank to cover all of the bills coming out directly, take all the rest of it out only leaving a buffer of $20 or $30.
That money goes into your envelopes, and that’s all you have to spend.
Once it’s gone, it’s gone.
No more borrowing.
No more using credit cards.
No more using debit cards (except for special situations like car rental).
9. Hold yourself and your family accountable
So you have your budget all planned out.
It looks beautiful on paper.
You feel accomplished. Like you REALLY CAN do this.
Then, it gets hard.
Something comes up and you feel like you need to do it, but you didn’t budget for it.
Sometimes you don’t have any choice, but most times you do.
For example, before learning about Dave Ramsey’s program, I would spend over $20 in the morning picking up breakfast at the convenience store on the way to drop the kids off at school.
It ain’t cheap to feed 4 kids.
That had to stop.
Now, a stop by the store has to be in the budget, and I have to get up in the morning and make breakfast.
It’s all about changing your behavior.
Learn to tell yourself no.
Learn to tell your family no.
After all, that’s what got you here in the first place, right?