learning how to budget

how to budget

starting simple.

When I first began budgeting I started as simple as possible. I did not want to become overwhelmed or wind up confusing myself. So, to start off, I made two columns. One column had my expenses while the other had my income. I began gathering my bills and writing down what they were. Expenses include anything you must pay for each month and income includes anything you earn each month. See the examples below of how to budget for expenses and income.

expenses:

  • Mortgage or rent.
  • Car payments.
  • Insurance (car, dental, health, home, renters, and vision).
  • Utilities (electricity, garbage, gas, sewer, and water).
  • Cable and internet.
  • Cellphone.
  • Credit card payments.
  • Student loans.
  • Entertainment (Netflix, Hulu, etc).

how to budget:

Once I listed all of my expenses and sources of income, I started filling in approximate costs. Some expenses are the same each month. For example, car and mortgage or rent payments. Other expenses will fluctuate throughout the year such as the electricity or water bill. For the fluctuating bills, choose the higher costs so that you are over-prepared.

After you have each column filled out to the best of your knowledge, subtract the expenses from the income. This is where you hope that your result is a positive number! If it isn’t, you need to rethink your expenses. This number will signify excess money that you can put towards things such as gas, groceries, and savings. Or you can use this money to get your hair done or treat yourself to something. It is absolutely up to you! However, I will suggest you put as much as possible in a savings account.

emergency funds:

An emergency fund is exactly what it sounds like: a fund for emergencies. This savings account should have a minimum of three months’ worth of expenses saved up. If something were to happen (you are unable to work or lose your job), you need to be prepared. Please remember, an emergency fund is separate than your regular savings account.

what is your favorite “how to budget” suggestion?

Don’t forget to check out my post about becoming frugal!

becoming frugal

becoming frugal

becoming frugal

In less than a year I will have earned my Bachelor’s degree. While this is extremely exciting, it is also extremely scary. Once I graduate college and earn my degree I will need to begin paying on my student loans. Looking at the balance that I will owe is extremely daunting. In fact, if I could, I would pretend that it didn’t exist. However, doing so will only hurt me in the long run. Due to the costs of attending college, I have had to reevaluate my finances.

Trying to figure out finances when I have children, a mortgage, car payments, and dozens of bills is incredibly stressful and time consuming. Honestly, there are times that I want to throw my hands in the air and say forget about it. So, what can I do when it comes to becoming frugal?

evaluate current expenses:

Or, in other words, figure out what I can cut back on or completely cut out.

  • Electricity. During the summer, our electric bill is tiny! Our lights are rarely turned on, heaters are set to off, and we are home a lot less often. However, in the winter that bill doubles or even triples. As a result, John and I have to remember little things like turning off the lights if we are not in the room or trying to keep the thermostat down.
  • Water. Taking shorter showers, turning off the water while brushing our teeth, and washing our clothes on cold helps quite a bit. Also, ensuring there are no leaky faucets or pipes can make a huge difference!
  • Gas. We have been known to make multiple trips to the store… in one day. Our 4Runner does not get the best gas mileage! Cutting down on those spur of the moment trips can help save quite a bit.
  • Paper towels and toilet paper. Instead of cleaning with paper towels, use a wash cloth. You will be amazed at how many paper towels you save doing so! Also, with toilet paper try not to go too overboard.
  • Leftovers. When I found out one of my friends just tosses the food they do not eat after they cook dinner I was stunned! Often when I make dinner we have at least two or three meals worth of leftovers. Not tossing that food saves us quite a bit of money in the long run.
  • Get togethers and parties. Our friends love to get together often, this means that we have a tendency to need a lot of party supplies. Because of this, we have decided to do our get togethers potluck style! That way no one person is having to foot the entire bill.
  • Cable, cell phones, and internet. Ask yourself if you really need all of those extra channels you never watch or data you do not use. Perhaps you watch Hulu or Netflix ten times more often than you do cable. Cutting back on your plans and services can save you thousands of dollars per year!

What ways of becoming frugal would you add to this list?