Money money money money, MONNNNNEYYY.
I hope you sang that how I sang it while typing it. Money woes. That’s what we’re here to discuss today. It’s all about establishing that budget, babayyyy. Now, some of you might be thinking “Whitney, how am I supposed to establish a budget when I’m broke?” and girl i’m right there with you. HOWEVER, you can create a budget even if you are “broke.” The first thing a budget is going to help you do is determine whether you are really broke, or if you just have bad money management. I think I’m a mixture of both (lol).
Let’s begin, shall we?
Budget’s are great. What’s not so great is sitting down and taking a look at your finances to establish said budget. But hey, what needs to be done must be done. Just do it; I promise it will be worth it! The easiest way to do this is to sit down and first write down your income. I do mine monthly, but you can do it bi-weekly or however your payment structure is setup. If you don’t have a consistent income (aka server, work for yourself etc) just try and estimate as best as you can what you make in a month and go with that.
Go on, get out that pen and paper and let’s get to work!
So now that you have established what your income is, you’ll want to write down all of your “fixed” expenses. Fixed expenses are those that you must pay every month and they normally do not change. This category consists of things like rent, utilities, car payments, insurance, etc. These are all considered “fixed” even though some of them could technically change. For instance, you could move to cheaper apartment, pay off your car or refinance your home etc. You get the point.
The variable expenses category is usually the one people neglect to budget. You “set aside” $100 for groceries but end up spending $200. You go into Target for shampoo and come out with a new planner, coffee mug, makeup and that cool snowman statue you saw in the dollar section. Been there. It’s important to set aside specific amounts of money for things in this category so that you don’t overspend and you are left with money to allocate to savings or retirement. So what is a variable expense? These expenses include groceries, restaurants/food, that cup of joe in the morning, entertainment, and everything else that isn’t “necessary.” I know you might be thinking, “but whitney that’s a lot of information how will I ever keep track of it all?” Here’s where YNAB comes into play.
You Need A Budget
Most commonly referred to as YNAB, is a personal budgeting app that allows you to allocate money to each category and keep track of it all so you don’t overspend. This program wants to help you stop living paycheck to paycheck, get out of debt and save money faster. The system is built on “zero-based budgeting” which basically means that you don’t spend what you don’t have. You enter your income for the month and then budget how it’s going to be spent or saved.
Give Every Dollar A Job
With YNAB, you assign every single penny you earn a “role.” Every dollar has a specific task that it goes towards. This helps you think before you spend your money. I previously had the mindset where I paid all my bills that needed to be paid then didn’t look at my bank account again. I would just whip out my card and swipe, swipe, swipe. This is RECKLESS. Who knew I could be reckless (lol). If you actually utilize YNAB you will stop spending money you don’t have and only spend the amount of money you set aside for each category each month. If you say “i’m only giving the entertainment category $80 this month” and you spend all of that $80 and a friend asks you to go to the movies you better take money from a different category or say adios to movie night. It ain’t happenin’.
Take Control Of Your Money
Not only does YNAB help you budget your money; It helps you save your money. You can set savings goals in YNAB and the app will help you track how much you need to save each month, and tells you when you will meet that specific savings goal. Pretty neat stuff. You can check out the software here and get a 34 day free trial to try it out. What’s to lose? (it sure isn’t money).