No, no, not THAT one. We are family-friendly here. I mean Budgeting. (shudder)
If you are like me, I hate the word. Tracking my expenses? Ok. Actually wanting to change them and deciding how they need to change? No, thank you. Unfortunately for us both, today’s prep for our month-long no-spend challenge involves evaluating our current state and defining what we want it to look like. Think of it as a road trip. You need to know your starting point before you can plan your drive. The route you take to get to Texas is going to be very different if you are starting in California or if you are starting in New York.
So, Step 1? Grab ALL the statements. Bank, Credit Cards, Paydays, etc. ALL of them.
Now, if you are like me and love to play with spreadsheets, this is where we get to have fun. Import them as .csv into your favorite spreadsheet tool and organize them into buckets. If you think I am crazy for loving spreadsheets, well, you aren’t wrong. But some handy dandy tools will pull in all of your account information and organize it for you. Personally, I like Mint.Com. You will need all of your online usernames/passwords, but it will then pull everything into one place, along with a bunch of handy dandy graphs.
Once I have all of my statements in one place/tool, I start by reviewing our income, expenses, and spending habits. The key here is to be honest with yourself about where your money is going. Trust me, this step might sting a little, but it’s the foundation of building a budget that works for you.
- Calculate Your Income: Start by tallying up all sources of income, including your salary, side hustles, child support, and any other money coming into your household.
- Track Your Expenses: This includes everything from rent/mortgage and utilities to groceries, transportation, and those sneaky little splurges that seem to magically disappear from your bank account.
- Identify Your Spending Patterns: Take note of any recurring expenses or spending patterns that stand out. Are you spending more than you realize on dining out? Do you have subscription services you forgot you signed up for? Knowledge is power, mama, so arm yourself with the facts!
Step 2: Set Your Goals
Now that you’ve got a clear picture of your financial landscape, it’s time to set some goals. What do you hope to achieve with your budget? Are you saving up for a family vacation? Paying off debt? Building up your emergency fund? Whatever your goals may be, make them specific, measurable, and achievable.
- Short-Term Goals: These are goals you hope to achieve within the next few months to a year. Examples might include paying off a credit card, saving up for a home repair, or funding a family vacation.
- Long-Term Goals: These are goals you hope to achieve over the next several years. Examples might include saving for retirement, paying off your mortgage, or funding your child’s college education.
- Emergency Fund: Every mama needs a financial safety net, so make sure to prioritize building up your emergency fund. You can start with the Dave Ramsey recommendation of $1000 as that will cover most things, but you should ultimately aim to have enough money saved to cover three to six months’ worth of living expenses.
Step 3: Create Your Budget
Now that you’ve got your goals in place, it’s time to roll up your sleeves and create your budget. Think of your budget as your financial roadmap—it’ll guide you towards your goals and help you navigate the twists and turns of daily spending.
- Allocate Your Income: Start by allocating your income towards your various expenses and financial goals. Aim to cover your essential expenses first, such as rent/mortgage, utilities, groceries, transportation, and debt payments.
- Trim the Fat: Next, take a good hard look at your discretionary spending and see where you can cut back. This might mean reducing dining out, canceling unused subscriptions, or finding creative ways to save on everyday expenses.
- Set Spending Limits: Once you’ve allocated your income and trimmed the fat, it’s time to set spending limits for each category. Be realistic but also challenge yourself to cut back where you can.
- Track Your Spending: Keep tabs on your spending throughout the month to ensure you’re sticking to your budget. Use apps or spreadsheets to monitor your expenses and identify any areas where you might be overspending.
Step 4: Embrace the No-Spend Challenge
Now that you’ve crafted your budget like the financial wizard you are, it’s time to put it to the test with a month-long no-spend challenge! This is where the rubber meets the road, mama, so buckle up and get ready to flex those budgeting muscles.
- Stick to Your Budget: Commit to sticking to your budget like glue throughout the challenge. Resist the temptation to splurge on non-essential purchases and focus on your financial goals instead.
- Get Creative: Embrace the challenge as an opportunity to get creative with your spending and find alternative solutions to everyday needs. Can’t afford a gym membership? Work out at home or go for a run in the park. Craving a latte? Make your own at home and jazz it up with fancy flavors.
- Celebrate Your Wins: Every penny saved is a victory worth celebrating, so don’t forget to pat yourself on the back for sticking to your budget and slaying your no-spend challenge like the financial superhero you are!
So there you have it —a crash course in crafting a budget that’ll have you conquering your finances like a boss! Remember, budgeting is like riding a bike—it takes a little practice and a whole lot of determination, but once you get the hang of it, you’ll be cruising towards your financial goals with style and sass. You’ve got this! 🚀💰
