Making a Budget

budget3You have to budget if you’re broke. There’s no other way of getting around it. If you don’t budget, you find out that you’re about to get the electric cut off and have a choice between electricity or food. So here are some steps to take to keep that from happening.

#1 Write down your monthly bills.

budget 2
This part is simple. Write down all your monthly bills. Write down the days they are due and the amount you have to pay. If it varies, like the electric, you will need to estimate. Look at the last few bills and OVERESTIMATE how much you think it will cost. ROUND UP on everything to the nearest dollar or $5 or even $10, but always ROUND UP! This gives you cushion. Also, seasons can sometimes change how much you pay. For example, if you have gas heat and window AC like me, your electric is higher in the summer and lower in the winter, and your gas is higher in the winter and lower in the summer. Well, I’m sure you’ve figured this out by now. So here’s an example:

1st of the month Car insurance $115.00
16th of the month Gas Bill $50.00
18th of the month Water Bill $40.00
20th of the month Garbage Bill $20.00
25th of the month Electric Bill $20.00
28th of the month Netflix $25.00
30th of the month Cable Bill $65.00

#2 Write down your paydays for the next 6 months (after taxes).

payday

ROUND DOWN. This will give you more cushion. For this example, I am only going to do 3 months to make it shorter and simpler.

January 3 Payday $600
January 17 Payday $600
January 31 Payday $600
February 14 Payday $600
February 28 Payday $600
March 14 Payday $600
March 28 Payday $600

#3 Put it together.

budget

Here’s the hard part. Intertwine the bills to where they are paid on time and you have about the same amount of cash left over after bills each payday. You will notice that there will probably be a pattern. You’ll pay certain bills with one paycheck, and others in another paycheck.

DATE DESCRIPTION PAYDAYS BILLS BALANCE
January 3 Payday $600 $600
January 16 Gas Bill- January $50 $550
January 18 Water Bill- January $40 $510
January 20 Garbage Bill- January $20 $490
January 25 Electric- January $20 $470
January 25 Netflix- January $25 $445
Extra Cash $445 $0
January 17 Payday $600 $600
January 30 Cable Bill- January $65 $535
February 1 Car Insurance- February $115 $420
Extra Cash $420 $0
January 31 Payday $600 $600
Free Payday!!! * $600 $0
February 14 Payday $600 $600
February 16 Gas Bill- February $50 $550
February 18 Water Bill- February $40 $510
February 20 Garbage Bill- February $20 $490
February 25 Electric Bill- February $20 $470
February 28 Netflix- February $25 $445
Extra Cash $445 $0
February 28 Payday $600 $600
February 28 Cable Bill- February $65 $535
March 1 Car Insurance- March $115 $420
Extra Cash $420 $0
March 14 Payday $600 $600
March 16 Gas Bill- March $50 $550
March 18 Water Bill- March $40 $510
March 20 Garbage Bill- March $20 $490
March 25 Electric Bill- March $20 $470
March 28 Netflix- March $25 $445
Extra Cash $445 $0
March 28 Payday $600 $600
March 30 Cable Bill- March $65 $535
April 1 Car Insurance- April $115 $420
Extra Cash $420 $0

#4 Remember the details.

saving

Don’t forget that sometimes bills fluctuate during the months and fix the budget accordingly.

Did you notice the free payday?

If you get paid every other week, you should get paid twice a month. However, sometimes there are three paydays. If you get paid weekly, you’ll get paid four times a month, but now and then you’ll get a fifth payday. Those of you who get paid weekly will get more free paydays, but of course it’s half the amount as what you’d get paid if you were paid bi-weekly.

#5 Budget the extra cash

saving 2

Now that you know your extra cash after bills, you need to know what you need to spend it on. Here are a few things that you probably want to put into the extra cash budget:

  • Fuel for vehicles or fair for public transportation
  • Fast Food/Groceries
  • Baby stuff- diapers, formula, butt creams, medicines, clothes, whatever else
  • Household cleaners
  • Toiletries
  • Animal food
  • Tobacco (nasty habit, but hey some people do it)
  • Entertainment
  • Anything else you may need to spend your money on
Now that you know what you need to spend your money on, disperse the “extra cash” among the categories. Put your priorities in order. For example: fuel, food, baby and animal food are on the top of the list. Household cleaners & toiletries are in the middle. Entertainment is at the bottom. Tobacco… well… it’s all in perspective I guess. Figure out how much should be spent in each category. If you run out of money, you might have to take some from other categories or do some coupon clipping.

EXAMPLE:

BUDGET $420
Fuel $125
Food $150
Baby $50
Household $30
Toiletries $20
Animals $20
Entertainment $25
TOTAL $420

#5 Keep to the budget:

money

Now that you have a budget, keep to it and remember your priorities. There are a few ways to keep to the budget.

Personally I make a shopping list and estimate the amount that I will spend on each one. Here’s an example of a shopping list:

Fuel $125
Food $150
Baby
Diapers $25
Wipes $5
Shampoo $5
Powders $5
Diaper Creams/A&D $10
Total $50
Household
Laundry Detergent $10
Bleach $5
Toilet Bowl Cleaner $5
Dish Washer Detergent $10
Total $30
Toiletries
Deodorant $5
Toothpaste $5
Razors $10
Total $20
Animals
Dog Food $10
Cat Food $5
Dog Treats $5
Total $20
Entertainment $25
TOTAL $420

I usually make a different list for groceries with a total of my food budget (this example is $150).

budget envelopes

Another way to make sure that you stick to your budget is to withdraw all the “extra cash” after bills from your banking account (if you don’t already have it in cash) and put them in marked envelopes. Write what each envelope is for and put that amount in the envelope. As a matter of fact, it’s a good idea to use cash. It’s a lot easier to go over your budget by swiping a card than by seeing the actual total you have left right there in your envelope. A dollar here and there adds up to a lot. If you go over $10 on household supplies, you might not have enough money to get soap and shampoo. You’ll stink, but hey your toilet will smell like lavender, right?

I will be making another blog post with tips on how to stick to your budget and save money. There are many things that you can do to save a dollar here and there to add up to extra cash to throw in the piggy bank for the things you really want to spend it on, like a vacation!

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