If you are like me, you like to go out to eat with friends, you like to buy shoes and clothes, you like to get your nails and hair done AND you like to pay your bills. I also, prefer to not think twice about spending my money. How can I do this? The answer is simple. Budgeting!
Establishing a budget will allow you to create a spending plan for the things you need and want to spend money on each month. The thing to remember about budgeting is to treat it as a guideline for your spending rather than a restriction.
The first step in creating a budget is determining the amount of money you are bringing home each month. If you are on a salary, this should not be too difficult. If you are paid hourly, you can do this one of two ways. The first would be to look at your paystubs for the past several months and average the amounts. The second, requires a little more time and a lot more math. It involves calculating average hours, converting that to pay, and accounting for taxes. So, if you have the option, go with the first method.
Now that you have accounted for your income, you need to take a look at your expenses and differentiate your needs from your wants. Distinguish which expenses you know to expect each month, things that you decide to purchase, and other infrequent costs. You can classify your expenditures into one of four categories:
- Fixed- set amount, due on a regular schedule (i.e. rent/mortgage, car payments, insurance)
- Variable- due on a regular basis; amount may vary (i.e. utilities)
- Flexible – choice expenses (i.e. entertainment, dining out, shopping)
- Unexpected- irregular expenses (i.e. emergency repairs, travel, gifts)
You’ll want to monitor ALL of your spending for one full month and I do mean EVERYTHING. Hold onto those receipts, ladies!
Now, take all of this information and put it into a worksheet. There are tons to choose from. Most Microsoft Office products come equipped with some sort of budget template. Since, I am a full time student, I used the College Budget Template in Excel, which gives me a graphical depictions of my spending.
Here are a few basic recommendations for putting together your budget:
- Tithes – 10% (Malachi 3:10)
- Housing costs – 30-33% (this includes rent, insurance, HOA dues)
- Transportation – 15% – (car note, gas, insurance, oil changes, etc.)
- Savings – 5-10%
What are some elements in your budget? Share comments, below.