Living on a Budget

As most of you know, since I’ve beat it with a stick, I live on a strict budget.  This is for a few reasons:

1. I’m trying to clean up finances.  Between school loans and poor choices, my finances need some cleaning.
2. I want to.  I’d like to make this a habit when I’m able to be flexible so that when my financial tie-ups become more serious (mortgage, wedding, family) I’ll already have laid the foundation and formed a habit.
3. My consumption is ridic and I really don’t need anything.

But I am human and even though I don’t need anything, I definitely want things.  That’s why I am so happy to have found other bloggers who also live on a budget and shop cheaply.  It’s inspiration and proof that it can be done.

So what is my budget?  Well budgets are really personal and what you need or are willing to cut back on, I might not be and vice versa.  So I won’t go into details, but suffice it to say it is cut down to almost no unnecessary spending (again, what is necessary to me might not be necessary to you).  Instead of telling you about mine, I thought I’d share a few tips on how I made mine.  Here goes nothing.

1. Get comfortable with Excel. I can’t say this enough. Excel is a life saver when it comes to budgets and numbers. Learn how to use formulas in Excel. Especially sum.
2. Know what you get paid monthly. This is a no-brainer, but a lot of people don’t know this number. Know the amount and when. Do you get paid every other week, once a month, or the 15th and last day of the month? Do you get a bonus? Do you rely on that bonus? Know all of your numbers.
3. What are your non-negotiables? These are items that you will not adjust or budge on. Of course, sometimes adjustments have to be made, but your non-negotiables are the last items to be adjusted.
4. What are your needs? These are things that are not an option. You need to eat, commute, pay bills. Make a list (in Excel) of those items. Because I just moved back in with my parents, my needs are a little different than yours might be. My grocery budget isn’t nearly as high as it was when I lived alone. But I still have to commute, and I commute far for work, so my gas budget is high. Make sure to accurately figure these budgets out. I calculated the mileage to work, how often I drive to work and other places, and used an estimate of current gas prices to figure out that monthly need. Do this with your other needs as well.
5. What needs to be paid off? Loans? Credit card debt? These come before your wants. In fact, these are considered a need in my book. I don’t adjust these numbers– they are fixed for me and non-negotiable.
6. Figure out what is most important to you. Is having the latest fashion most important? Accessories? Clothes? Eating out? Groceries? Fitness? Alternative health? Knowing this will help you prioritize your wants. For me, alternative health/fitness is the most important. This is an area I really won’t budge on. Clothes aren’t important to me right now for a few reasons—I’m trying to lose weight, I need to reduce my consumption, and I have enough clothes. So I have a zero clothing budget, but a generous budget for yoga and the chiropractor. It’s all about knowing what you want and what you don’t care so much about.
7. Plug and chug. Fill in your needs, non-negotiables, and debts and subtract that from your salary. See what you have left and start adding numbers to your wants. If you set up your excel so that it automatically subtracts from your salary, you can see how the numbers change.
8. Now that you have all these numbers and you know your budget, what are you going to do with it? You need to find the method that works for you. Some people are less inclined to swipe plastic, I am more inclined. If my debit card is in my wallet I will use that before cash and have no idea how much I spent therefore completely ruining all the hard work I did on my budget. So I decided to get the cash out each paycheck and put it in labeled slots in my wallet. The debit card stays in a safe place at home and I can see my cash going down each time I spend it. It definitely makes me think twice before throwing anything in the cart. Some people like to use their debit/credit card so they can see where they spent their money on their statement. Whatever it is, find what works for you and do it!

Now for a few helpful links:

• Dave Ramsey’s Debt Snowball
  This works amazingly for me.  I love having a simple plan and seeing my debts reduce drastically.  I also love that there is a light at the end of the tunnel: I might be paying a lot towards debt right now, but by doing that I will be out of debt quicker and all of that money will be allocated towards more fun/smart things.
• Excel Help and How-Tos
  You can learn formulas here!
• A wallet with multiple pockets.  I found mine for $4 on sale at Target (budget living) and it has multiple pockets that I labeled (yup) with each category.  I put the cash in the appropriate pockets and it helps me keep to my budget!

Crochet Overlay Wallet

• A simple spreadsheet.
  I created this simple spreadsheet and uploaded it to Google Drive.  You can download (let me know if you have an issue and I can email it to you) and use it as you please.  The sums are set up for you.  I like to color code my spreadsheets so you’ll see it is color coded.  This is a simple spreadsheet to start plugging and chugging with to see how quickly your salary dwindles down.  Note: my tax break is 25% so that is set there.  You can do without those columns and just enter your after tax salary or look at a few paychecks and figure out the average of what you get paid each payperiod.  I hope this helps you 🙂

I hope you’re able to find something useful in this post.  Keep my zero clothing and accessory budget in mind as you view my fashion posts: all of my fashion posts are with clothes/accessories I already own unless otherwise noted.  I am human after all and might use some money from another budget area to buy a new item every once in a while.

How has this post helped you?  How do you make a budget?

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