Budgets

How to start a budget that will change your life

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I know for some of you the word budget strikes fear into your heart. But what if I told you it isn’t hard? A budget doesn’t mean the end of fun and restaurants and shopping? What if I told you that starting, and sticking to, a budget might be the greatest thing you have ever done? Read on to learn how to start a budget that will change your life!

Today we are going to look at what a budget is (and isn’t) and what it can do for you to get intentional with your budget!

What a budget IS

A budget is a tool to help you do a job.

Like a fork helps you put your food in your mouth, a budget helps you put money in your bank account. Or, as a map helps you plot a route from one place to the next, a budget lets you make a plan for your money so that you can get the most out of it. It is a tool. A tool that is available to everyone, and can make a huge impact in your life, when used with intention!

A budget is a plan.

Using a budget is simply setting a plan for your money. A spending plan lets you see where you will spend your money each month. When you don’t have enough money to do the things you need or want to do, you can use your spending plan to prioritize and focus your spending to support your goals.

A budget is fluid.

Your budget will shift and change with each new month. New expenses and goals will come up throughout the year, and your budget will reflect that. Monthly adjustments aren’t just allowed. They are STRONGLY ENCOURAGED. Make this budget work.for.you.

What a budget is NOT

A budget is not restricting.

I’m sure when I talk about budgets, some people get overwhelmed at the thought of all the things they won’t be able to do. A budget isn’t a ‘no’ to everything you want to buy though; it’s just setting a plan and buying things with intention.

A budget is not about living in deprivation.

I am not a fan of fad diets – as soon as you tell me that I CAN’T eat something, it’s literally the ONLY thing I want to eat. But when I eat balanced meals and have treats IN MODERATION, I can get healthy without feeling deprived and miserable.

Same goes with money. If your budget is so strict and limiting that you don’t get to do ANY of the things you love, will you stick with it? I sure wouldn’t.

There will be times where your budget is tighter than others. When you are paying off debt or when you are saving for a specific goal – just like with the diet, you cut back on the treats, but you don’t go without.

Intentional finance is about PLANNING what you want to spend your money on. So if you’re going to indulge in a big purchase, you can add that expense to your budget, save up for it, and buy it without going into debt or feeling guilty. Win!

A budget is not a one-size fits all situation.

To be successful, your budget has to work for YOU.

That might mean you do it in a spreadsheet that you designed. Or in a notebook. Or maybe on a website. There are a thousand different ways to DO a budget – what matters most is that you choose one, and use it!

I really love using EveryDollar.com – it does the math for me, transfers budget categories from one month to the next, and I can track my spending from my phone OR my computer, which means I can do it whenever is most convenient for me! I also like having a complete picture of my whole month in one spot.

The budgeting strategy I use is called zero-based budgeting. That means that I give every single dollar I make a job. I don’t spend it all, but I know how much I can spend in different categories, and how much will be going into savings each month. For years, I left my savings up to chance. If there was anything left over at the end of the month to save, great! But guess what? There was never any money left over! Without a plan, we would easily spend every single dollar (and then some!) without thinking twice about it. Using a budget has quite literally changed our lives.

If EveryDollar doesn’t work for you, check out The Budget Mom for an excellent budgeting strategy, using pen & paper and looking at your income by paycheque rather than by month. Same awesome idea – know where your money is going – just a different way of thinking about it and recording it!

The most important part of this isn’t WHICH way you choose to do your budget.

The most important part of this is that you do it at all!

Do something today your future self will thank you for
woman looking into the distance
inspirational quote

How to get started

Whatever your method of budgeting, you need a few things to get started.

First, choose your way of recording your budget. Get yourself set up with an account or print out the templates that inspire you!

Even if you are doing it online, I always keep a notebook nearby, just in case. And some pretty pens always motivate me, and I know I’m not alone in that!

Then, take a look at your pay stubs, your bank accounts, your bills.

You need to know:

  • what money is coming IN each month
  • how much your bills are, on average
  • what your minimum payments are on all debts
  • your average spending on things like groceries, restaurants, and entertainment

The more information you have, the easier this process will be!

Budgeting 101

Now that you have all your info – you are ready to get started!

Put your income in first.

This includes any money you have coming in – paycheques, pension, child support, alimony, child tax credits.

Next, subtract your fixed expenses, like rent or mortgage, utilities, insurance, minimum debt payments- everything with a set amount! (Or roughly set amount, I know your utilities probably shift from month to month.)

Then, account for all of the variable or shifting expenses. Groceries, gas, clothing, restaurants, entertainment, holiday savings…use your bank statements to see what your average spending in these areas is.

Your goal in budgeting is to assign EVERY single dollar a job. So if you have ‘paid for’ all the things, and you still have money left over – GREAT! That extra money gets put onto whichever money goal you are currently working on.

If you are just starting out, your first goal should be saving $1000.

Next, focus on paying off every single debt you have. Any money ‘left over’ after all your expenses are covered should be used to pay off your smallest debt first.

Once you are debt free, you get to use that money to build up retirement savings and pay off your mortgage!

Successful money management is about spending LESS than you make. If you didn’t have enough money in the month to cover all of your expenses, you’ll need to go in a trim your budget down. Start with your variable expenses – groceries and entertainment categories are an excellent place to start when cutting back.

And it’s important to note if there is money left over, that isn’t an open invitation to up your restaurant budget by $500 and eat out every night! Think about your goals and priorities and put that money to WORK helping you achieve them!

Finding Balance

Once you have balanced the budget, you will have decided what to do with every single dollar you bring in. This doesn’t mean you are going to SPEND every dollar.

You might put a line in your budget to save for an upcoming vacation, and that money won’t get spent yet, but it will be accounted for.

I budget $200 each month for our pets. This is food, vet, grooming – all things pet. I rarely spend that much money, but I have a growing pocket of dollars in a separate account that I know is dedicated to them when I need it.

OR, if you budget $800 for groceries, but only spend $550, do a happy dance! Now you have $250 to put on your current debt, to put in your vacation fund, or even to go out for a nice dinner!

The awesome thing about this is that YOU get to decide!

Track that spending

Budgeting is often seen as a plan that you make, but rarely a map that you follow consistently throughout the month. It doesn’t help to decide to spend $500 at the grocery store if, in reality, you spend $800! That’s $300 extra – where is that money coming from??

To be successful at this whole money-game, you need to check in on your progress on the journey and adjust your course as required.

Tracking your spending is how you do that.

When you spend $76 at the grocery store, track it.

When you pay your bills, track them.

The $4 coffee on the way to work or the bread run to the grocery store, or the Amazon purchases last week.

Track every dollar you spend – throughout the month you’ll see where you are on track, or where you need to cut back, and you can adjust your budget accordingly.

Budget Tips

Are you ready to get started? Or are you feeling a bit overwhelmed? Fear not – there are a few things that might make this process easier!

teamwork

Find an accountability partner.

This might be your spouse or partner – if you manage your finances as one unit, you definitely both need to be on the same page when it comes to the budgeting.

A friend can be a great accountability partner too – someone to review your numbers with, who will check in on you and see how the month is going, remind you to track your spending, and makes sure you are staying intentional!

Check out why we think being a part of a community for support is one of the most important parts of our financial journey!

make it a date night

Managing money with another human can be tough stuff. Often, one partner is a spender, and the other is a dreamer. Or, in my experience, it can take one person longer to get on board with a new plan than the other.

Discuss WHY you want to be intentional with your money and why it’s essential to work together as a team. Talk about the future – what do you want that to look like? What goals do you have together? Set your budget TOGETHER so that both parties know the plan.

To make it more enjoyable – make it a date night! Turn off the TV, crack open your favourite beverage, have some snacks…add a bit of fun to the experience!

be patient

Try not to get bill-happy and spend all your money when you get the first paycheque of the month. It will take some time to figure out the scheduling of it all, but it’s easy to get excited and pay ALL the bills at once, and then have no money for groceries until the next payday! (Been there, done that!)

If you are paying off debt or building up an Emergency Fund, there won’t be much extra money to play with. Your goal should be to get through the first steps as quickly as you can, so you can move on and start building wealth. Be patient with this too. It took us 13 months to pay off all of our debt, and it’s taking us a few months to get our Emergency Fund into place too. Patience isn’t always easy. I just know how good it will feel to achieve this goal and move on to the next one!

put your head down and get to work with fierce determination 
Chris Hogan
inspirational quote with man staring at the ocean

give yourself grace

Know that it is okay to make mistakes, to make adjustments, to not be able to make it work the first time! I still struggle with my budget, I make changes, I forget to track things, and that is okay!

With time and practice, the process will get easier and when you start to feel the WINS of financial success, oh boy is it ever worth it!

Do you still have questions about your budget? Drop a comment below, and we’ll help you work through it!

Happy budgeting, friends!
You’ve got this!

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