I’ll be writing about everything budget related this month and I am super excited to share. To start, I will give a quick guide on how to set-up and maintain your budget.
Why Have a Budget
I created a budget to keep track of my funds. I like to shop, a lot, and this is a bad habit when you also want to save for a house, car, or whatever. I needed something I could visually see that captured the big picture and just looking at your bank account doesn’t cut it. The best thing you can do to start your road to financial success is understand where every dollar goes. Like the cliché saying, when you know better you do better, and this applies to your money management as well. I did not create a budget to restrict myself from buying what I wanted. I created a budget to better align my spending with my goals. With a budget I can see, and it has helped me with my money management tremendously.
What to Use
I created my budget using Google Doc’s spreadsheets (see here) and example below. I used this tool instead excel or word because I could easily update my budget at any time and not have to go to my email/computer to pull a copy. There is also a Google sheets app (download here) that you can have on your phone or iPad which features an offline mode option for editing on the go. The tool is just like excel and pretty easy to use on all devices.
How I Set-up a Budget
Once you choose which tool will work best for you set up a format like the one pictured above. You want your budget to be specific, current, and detailed.
- Set-up your budget to match your pay schedule.
2. Get your bank statements for the last two months and set-up categories for each expense on your account.
3. Once you have the dollar values add them up them up to the penny and drop them onto the sheet within the proper pay period. Do not leave anything out; you want your budget to be accurate as can be.
4. Set-up a formula at the end of the sheet to calculate how much money you have left over. This should leave you with your ‘spending money’, and I use this for clothes, drinks, going out, or more saving. I do not divide these categories because they vary so much. I think it is easier to just know you have about $300 to do as you please with rather than estimating a restricting number. I do constantly track this amount as I draw down on it.
Maintaining a Budget
Done, now to the fun part, now try to stick to it. The best thing you can do to STICK TO YOUR BUDGET is to use it for everything. When you make a purchase remember to draw down on your spending money so you can know how much you have left. When a purchase comes in more expensive than expected ALTER YOUR BUDGET to make sure it’s current. Budgets are useful when they are in real-time.
The problem with budgets is they become stale, stagnant, and just too hard to keep up. Life occurs as well which sometimes causes you to live outside of your budget lines. I recommend re-visiting your budget monthly for overall updating. I added a few tabs to my budget document to track life happenings and random wants. If I notice a new spending pattern I will add a new group to my budget to account for the money I spent. To avoid my budget going stale, upfront I analyzed my banks statements in detail to document the exact amounts spent. These amounts should not change that much so these expenses are one less thing you have to worry about.
Now that you have the tools to get you started all you have to do is execute. This exercise took me about an hour or so and the benefit I received was well worth my time. Let me know what you think and if you have any questions. Next up, I will be providing a list of useful apps to help you with your budgeting.
(sidenote) I am always conscious of the balance showcased on this blog because I really am passionate about both topics. With the array of external pressures I experience the path can get a bit blurred sometimes. I truly believe young women of color can gain from understanding how to succeed in their careers, how to be comfortable in their own skin, how to realize their style, and how to be involved in positive things in general. These key topics better equip young women with the tools they need to be better. Let me know if you would like to see more of a topic that you think could be useful to others as well.