How Do I Create A Budget?

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Hot subject with times being the way they are. Prices rising, paycheck hit or miss, or if you are lucky enough to have one, you might not be making the amount of money you are used to, so how do you survive?

Hopefully, this post will help you with this topic. Now, let me tell you, I am not a financial expert in any way, shape, or form. However, I had raised two kids as a single parent before I met my wonderful husband. I have learned over many years, given I am up in my age, so I have many years of life experience that I will share with you.

Where to start?

Excellent questions. I had the same question when I was younger. Many of us at the job I worked at the time had the same question, so the company brought in someone to teach us a financial class created by Dave, who gives excellent advice on finances.

We all learned we didn’t make enough money to do the type of budget they said we should have in that class.

Go figure right.

I took what I learned from that class and made a budget to fit my paycheck as best as possible. In the course of Dave’s lesson, he recommends the envelope strategy, which is good because you can only spend what is in that particular envelope toward that bill. Yes, it can be a little hard to do that since you might have your paycheck direct deposit. I realize times have changed. Ok, I recommend you either do this on paper; I prefer to use excel because I know how to do the formulas, and it makes for quick work just plugging in the numbers in the correct box, and boom, you have your budget sorted by category.

The first part of the budget is Survival:

My dad always recommends paying yourself first, mainly putting money in a saving account of ten percent. Now, if you are like me, I looked at my check and laughed at the man when he told me this. No way would happen, and I could keep a roof over my kids and my head. If you are interested in a saving account, check out How Do I Save For An Emergency Fund?

Mortgage/Rent – We all need a place to lay our heads. With times getting harder by the day, this is most important.

Now, if you are renting, take a step back. Is there a way to lower your cost of living? The answer is yes. It might not be the way you want to live, but sometimes you have to start at the bottom and work your way up.

What do I mean by this? You can look for something to buy to cut your cost of living. The perfect example we gave up a three-bedroom house and purchased a 1970 Holiday Rambler Travel Trailer. It was small, but it did us well for the year we lived in it. Yes, we parted at a trailer park and paid rent for the lot monthly. Just wait, you see. That decision cur our expenses by over a thousand dollars a month. Can you imagine what you can do with that? Ok, stop right there. It’s not going to that shopping spree you are thing about. Will get into this more later.

Did we upgrade?

Yes, we would have stayed in it, but our granddaughter lived with us full time, so we decided we needed something bigger so she could have her own space. Plus, with our upgrade, we now have holding tanks we found out in the freeze would have been a plus factor with storing water. We knew we wanted to go north, so this was a must item.

Are you buying your home?

If you answered, yes. Do the best you can to pay off your loan as fast as possible.

How, you ask?

By paying an extra or two payments, write on the check principal amount only. Anything you pay to the principal amount goes directly to the loan itself and not to the interest. When you are paying a loan back, your payment is most interest allowing the company to get their money. That is why you want to lower the loan amount, which reduces the interest that you pay, allowing you to pay off the loan faster.

If you want to refinance to lower your payment, you want to make sure you can get two-point or more; otherwise, you are wasting your money.

Ok, you are now wondering how I know all this right. When I lived in North Carolina, I would at several Lawyers doing Real Estate Loan Closings. Hence what I said above, life experience.

Utilities – You have to pay for electricity, especially if you have kids or a medical condition. Plus, have fuel, whether it is propane or natural gas, for heat or cooking. Let’s face it, on a cold winter’s night, it is nice to have heat to keep you warm.

Communication – You want to have the ability to call someone; if not, just say hi to remain sane or keep up with the news. I recommend a cell phone because you can get more for your money. Plus, if it gets turned off for any reason, you can still make an emergency call. We use a family plan, split the cost with our family members. We now pay a lower price because instead of sixty dollars a line, we pay twenty-five dollars a line. Mostly, everyone in the pays on time.

Travel – Yes, this is important. You have to have a way back and forth to work that pays your bills. Whether it be taking a bus, cab, Uber, or driving yourself, there are expenses. This includes your car payment, insurance, and fuel. Let’s face it, even if you can ride a bike to work, this will be an expensive category in your budget.

Now, if you are making payments on your car, work on paying it off as fast as possible. Your vehicle will not last several years without a breakdown. Most years, I would do is four, and even that is pushing it. Truth be told, unless I could buy it outright, I will never own a new vehicle again. I enjoy owning my property verse paying the company for interest, which could affect my budget. This will also allow you to lower the cost of your insurance bill, for you will not have to pay full coverage. Take this money to add it to the How Do I Save For An Emergency Fund?

Food/Household – Why is this not at the top? Yes, it is essential, but the cost above will depend on the amount and the type of food you buy to survive. Now, let’s face it, we have all become picky eaters. Sometimes, we have to sacrifice to move ahead; this includes the food department, people. No, I don’t mean Ramon Noodles every night. But, it wouldn’t hurt to eat out less. Yes, it means you need to cook more. Make a pot of beans with some rice; you can get a couple of meals to feed four people for less than twenty bucks.

Do you want to know how I stick to my budget?

Simple, an app called Out of Milk. It works fabulously. You might have to do some research to set it up because you have to put in the prices. I always add taxes to all of it because it seems more accurate in the checkout line. I haven’t figured that one out, but it did when I was in Texas.

At the bottom, it will tell your list total. This is an excellent tool because it lets you know if you are on a budget. If you are over your limit, you need to take some things off. Now, before you go too far in setting it up, there is a pantry list where you want to put your items, then when you go to make your list, go into this section and add each item you need by category, so it is easier to find within the store. This is one time you don’t want to be like the Jones. Ok, lets face it when the Jones spent three hundred dollars for food that just ran out and you bargain shopped spending half the money to get double the food. Who you want to me know? The Jones or yourself. NOTE: Please, don’t forget your pets.

There is also a note section where I like to add what store I got the price from. That way, I get the lowest price for the item I need.

Once you check that you have put an item in your cart, it will give you your cart total. So for all those extras you want to add to the cart, make sure you add them and check them off. My husband is famous for doing this. The main reason I like to shop without him also makes staying on a budget so much easier, plus he doesn’t budget shop like I do. He is the type to get in, grab it, and get out. Not very cost-effective. I enjoy making the most of our money. If you decide to look up the prices online before going to the store, I would add an extra dollar, usually because the online prices are cheaper. If you can afford to order that great, just remember to add it to your total for food/household expenses.

When you notice you are close to your budget limit, ensure you get the essential items you need without going over your limit. This will help you to stay on budget.

Child Care – Should you require someone to watch your kids while you work you will definitely want to make sure they get paid. Since, I don’t think you boss will be happy that you should up with your kids in tow at work. If your kids are in school you can look for after school programs that might help off set the cost of child care for I know this category alone can eat your lunch in costs.

Child Support/Alimony – If this doesn’t include you please, skip to the next section below. However, if this does concern you please continue to read. Child Support/Alimony is a must-pay! To ensure you stay out of jail. If you haven’t already had it deducted from your account. Now, if you can’t pay the total amount, pay something. Even if it is five dollars a month. It will help you if you have to go to court. When you can send in more money, do so. You do not want to mess around with this; they won’t hesitate to put you in jail. I have seen it personally. Ok, moving on to the next part of the budget.

Savings Account/Emergency Funds – These are important to have, we are taught all our lives to save and have a savings account. Not many people talk about an Emergency Fund. If you wonder about what it might be check out – What Is An Emergency Fund?

Other Bills – The last to the final thing on our budget is all the other bills. Yeah, this means credit cards, hospital bills, and whatever else you accumulated. The pesty statements seem like they stay forever. Yes, you can get rid of them.

How, you ask?

Well, that is a good question. Since there is so much to cover on this topic. I will answer this question in How Do I Get Out Of Debt?

The final thing on the budget is Entertainment. This includes shopping for clothes, anything new for your house. If you think all you are going to do is save, then you are mistaken. It is in our nature to want to spend money. So, how do I ensure not to spend too much? A great way to do this is to put your spending money on another card, like Paypal or a pre-paid credit card. A great one is the Serve Amerex card. They don’t charge a lot of fees. This way, your spending cash is away from your budget cash. You can’t spend what you don’t have, meaning it won’t let you overdraft. With the holidays coming up, there will be lunches, dinners, parties, and gift exchanges you will need to be ready for. Don’t forget that you will need to add extra money for gas to this card if you have to drive. Do not use your monthly gas budget for this, or you will be walking to work. That could be a very long walk depending out how far you live from your job.

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