10. Make a budget
I must confess, when we first created a budget for our income/expenses, I was skeptical. I was afraid that it would mean a complete lock down on the money, and absolutely no more fun.
After sitting down and figuring out how much we make and how much we spend on things that must be paid for (electricity, rent, food, etc) helped us get a better grasp on our financial situation. We knew how much leftover income we had after living expenses, and could budget it out based on how much we want to save.
Having a budget for things like going out to eat, seeing movies, etc (what we have categorized as ‘entertainment’) has helped us spend less on them.
Before we made a budget, it wasn’t uncommon for us to spend an extra $400/month and have no idea where it went at the end of the month. It had been spent on the occasional cookie, a cup of coffee every so often, lunch out at work a couple weeks a month, nights out, etc.
Having the budget also forces us to prioritize what we want to do as far as entertainment goes. It makes us think about if we want to go to breakfast this Saturday morning, or save the money and get a nice dinner next week. It makes spending money very intentional, which is what prevents the huge credit card bills at the end of the month due to impulse buys.
Three easy steps to a budget:
1. Determine total income
2. List all mandatory payments
3. Subtract mandatory payments from income and determine how to allocate extra income
Here is an example of a budget, similar to what Alex and I use. (Remember, this is just an example, things can be added/subtracted based on your life.)
Monthly Income
|
Income 1
|
1500
| |
Income 2
|
2000
| ||
Budget
|
Amt Income Left
| ||
Expenses
|
Tithe
|
350
|
3150
|
Food
|
200
|
2950
| |
Rent/Mortgage
|
1000
|
1950
| |
Couch Payment
|
50
|
1900
| |
Student Loan
|
70
|
1830
| |
Car 1
|
82
|
1748
| |
Car 2
|
283
|
1465
| |
Cell Phone
|
84
|
1381
| |
Insurance
|
185
|
1196
| |
Natural Gas
|
80
|
1116
| |
Internet
|
53
|
1063
| |
Entertainment
|
150
|
913
| |
Cars (Maint + Gas)
|
150
|
763
| |
Savings
|
500
|
263
| |
Other
|
263
|
0
|
Keep in mind that your budget should reflect what is important to you. For example, if saving for a house is a priority, savings should be increased before entertainment.
Happy budgeting!
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