6 Steps To Creating Your Budget

HEY AGAIN!

Or if not again, welcome to The Attitude Of Adventure Blog!
I'm Morgan Deane and my mission with this blog is to give great, applicable advice and funny stories, so that you get a laugh, leave with something helpful, and keep coming back!
I'm a Christ follower, I'm married to the LOVE of my life, we're parents to Winston BARKtholomew Deane the Goldendoodle, and I love drinking homemade smoothies every morning!
{Want to know More About Me? Check it out!}

And now, for the reason you came here today!

Creating a budget is easy, but putting together a cash flow plan that actually works and you will follow, not so much.
No worries! I'm here to help with some of our favorite tips and tricks Andy and I have learned in our first year and a half of marriage.

*DISCLAIMER*
I am not a professional financial advisor. I cannot guarantee that these methods will work, but these are the things that have worked for us.

1. START WITH YOUR KNOWN INCOME

You can't do a budget if you don't know how much money you have to spend. So start by adding up all of your income to see how much you should have. Some people think they get a pass on budgeting because they have irregular income, but you don't!

Andy's income is regular, so we know exactly what he'll get in every paycheck on Wednesday.

Mine, however, is irregular. I get paid hourly, so though each week is similar in hours, some weeks are more than others. I also get paid every other Friday, so some months I get paid twice, some months thrice.

2. PLAN FOR TITHING

All our money is God's money. He is the one who gave it to us, blessed us with good jobs, blessed us by protecting us from disasters so before we do anything else set aside money to tithe. Recognize it is all Gods money and we are just managing it for him, for his glory, while we are on earth.

We actually pay our tithe at the end of the month, but plan our best guess as to what 10% of our income will be, then adjust it later to cover the irregular income.

3. COVER YOUR NEEDS

After you've covered giving, then cover your basic needs before the everything else. According to Dave Ramsey, these basic needs are The Four Walls.

1. Food

2. Shelter (including utilities)

3. Basic Clothing

4. Transportation

1. Food

Under food we have:

a) Groceries - Food

The absolute first thing you EVER do with money is put food on the table. You should never ever go without food on the table. Now you may not be eating steak and shrimp but you should have basic food covered.

2. Shelter

Under shelter we have:

a) Groceries - Non-Food

b) Mortgage

c) Water

d) Electricity

e) Internet

f) HOA

g) Phone

h) Misc Household Running

Groceries - Non-Food covers the repetitious basic needs like toilet paper, tooth brushed, shampoo, paper towels, tissues, dish soap, laundry detergent, foil, plastic wrap, ziplock baggies, and the like.

We split Food and Non-Food because I like to know what we're spending in each category. It helps me not to buy more food than I should then not have enough money for toilet paper. Can't go without toilet paper.

Mortgage covers the house payment /rent. If you have food on the table and the housing taken care of you can start to breathe again. 

Water, Electricity, Internet, & Phone cover your monthly bills. These things come first! if your credit card is late so what but make sure your utilities are paid for!

HOA Dues covers your fees of living in a neighborhood if you do. Some HOAs can actually foreclose on your house if you are late!

Household Running covers the cost of non-repeating purchases you need to keep your house afloat. These are things like paint for our shutters because our HOA sent us a letter, a vacuum extension to clean out the dryer vent so it doesn't overheat and explode, a new toilet seat to replace the one that broke randomly, printer ink, etc.

It's important to distinguish that these are NOT house improvement items. We're not putting upgrade items in this category. It's irregular items that we don't buy super often or are are one-time purchases.

3. Basic Clothing

This covers only what you NEED. This isn't the budget for that $200 fancy jacket or a new purse you WANT. Get what you need, then put the rest in a separate category for extra spending AFTER you've covered the four walls. This isn't a monthly budget item for us. It comes and goes as the need arises.

4. Transportation

This covers:

a) Car Payment

b) Fuel

c) Oil Changes & Repairs

Car Payment may or may not apply to you. We don't have any car debt because we bought cheap, reliable cars with cash. When you pay with cash for a car, you pay less over all and it makes you appreciate it more because you own it.

Fuel covers only the gas thats gets you to where you need to go. Any trips or extra milage can be put into a separate category. Now we plan in the fuel we'll need ahead of time and put it all in the same category unless it's for a long trip more than 3 hours of driving worth. But when I first moved out of my parents' house, I didn't have a lot of extra money, so I had to keep it tight and drive only when necessary. If I could carpool, I would.

Oil Changes & Repairs cover the regular maintenance and the surprises because you know they're going to hit you at some point. If your car breaks down because you are being cheap it wont do you much good. This is another category we use a sinking fund for.

4. COVER INSURANCES

Health Insurance

Life Insurance

Auto Insurance

Home Insurance

ID Theft Insurance

Future post with more info about insurance coming soon!

5. PAY OFF DEBTS

We live in a world where debt is so normal, but it's holding us back. We can't live to our full potential when we're held back by student loans and credit card debt.

Take a moment and think about how much you spend in one month on debt payments.
No. Really stop and add it up on a calculator.

Now imagine if you didn't have those payments at all.
How much money would you be able to give away, save and invest, and live off of?

Y'all. We have to get rid of our debts. There's so much freedom when we do!

6. COVER YOUR WANTS

Medical Bills
Extra Giving
Going out to Eat/Fancier Food

Sinking Funds
Pets

Extra Payments

Dating

House Improvements

Subscriptions

Gifts & Holidays

Flex Money

Home Decor


Medical covers dentist visits, pain meds, prescriptions, eye doctor appointments, etc. This is another thing we would put in the sinking fund if we didn't have an Health Savings Account (HSA).

Extra Giving covers anything above a tithe. We support a child in Haiti for $78 a month.

A tithe is traditionally 10% of your income. Some do more, some do less. I think that God cares more about the heart of planned giving than the amount. On the other hand, he says that we should give 10%, so that's what we give out of obedience. Even when I was making about $500 a month, I gave 10% of that back to the church. It took a lot of faith to live off so little, but if I wasn't giving, I doubt I would have had the peace that I did. God takes care of those who are obedient to Him.

Extra Food/Restaurants

We break out groceries and restaurants into separate categories. I know a lot of people who have it all in one, but splitting it works best for us. Andy eats fast food for lunch almost every day he works and I cook almost every dinner we eat and do all the grocery shopping. It helps us to have these categories distinguished. You get to spend this, I get to spend this, we get to spend this.

Any time we have a meal for a dating, it goes into our dating budget. Anytime either of us eats out separately, it goes in the restaurant budget. All groceries go into either Food or Non-Food.

Sinking Funds are plans to spend money you know you will need later. For example, we have a sinking fund to cover the costs of Christmas. We save money each month of the year to go toward Christmas gifts and decor instead of getting to December and scrambling to get everyone gifts and feeling stressed. This also allows us to pick up items as we see them throughout the year and not feel like we're breaking the budget.

Another example is car repairs. You know your car is going to need new windshield wipers and an oil change at some point. When the repairs come along, we don't stress because we have the funds to take care of them.

Pets covers vet bills, flea and tick meds, food, treats, toys, etc.

Extra Payments cover any extra money that we throw at the house. We don't have any other debts, but this would also cover those. When you put extra down than your regular payment, make sure that you put it on the PRINCIPLE. Otherwise, you're not saving anything and they'll still charge you the interest.

Dating covers meals or adventures we take together. If we're on the road and grab Chick-fil-A for dinner, we will put that into Restaurants, but when it's a planned sit-down meal, we put it in Dating.

House Improvements cover anything that improves your home. Things like a new sound system, re-painting your bedroom, a new TV, new furniture, replacement carpet, etc. would be covered by this category.

Subscriptions cover payments like Spotify, Netflix, Amazon Prime, and the like.

Gifts & Holidays cover planned and unplanned gift giving. Christmas, Easter, birthdays, baby showers, white elephant, Valentines Day, and more.

Flex Money covers a set amount that each of us can spend without the other complaining. Ours is set to $50 a month. Each month I get $50 that I can spend on anything I want! I can get extra home decor, a new extra jacket, a paid phone app, a book I want, candy in the checkout aisle, etc.

Home Decor covers new pillows, picture frames, printed photos, wreath for your door, etc. This is my favorite to splurge on!

DON'T FORGET

Holidays & Birthdays
Parties & Celebrations
Yearly Subscriptions

Holidays & Birthdays cover those seen costs that come up. Obviously when Christmas rolls around, you can plan for gifts for family and close friends. You can plan to spend a set amount on each person, then stick to that budget. There are lots of great gift ideas for under $25.

Parties & Celebrations covers those unseen costs that come up. When you get invited to 4 white elephant gift exchanges, 3 baby showers, and your tree lights need to be replaced, those costs tend to add up.

Yearly Subscriptions: We have made a list of the payments we know are coming, then when we are planning the budget for the next month, we look at the list and make sure that we have everything in. Our first year of marriage, so many things caught us off guard. We'd start the month with a budget and every single month something would come up that we should have known about.

LEARN MORE!

Have you heard of Dave Ramsey? Probably. He is a great motivational financial speaker! He teaches people how to have peace in their finances. One of the classes that you can take by him is called Financial Peace University (FPU).

When Andy and I got engaged, he talked about how important it was to him that we go through this class together. I wasn't opposed, but not convinced of its importance either. We were both smart with money; we'd figure it out. Nonetheless, it was important to him, so I agreed to go with him, not expecting to learn a lot or change my habits.

The week we got back from our honeymoon, we started FPU. I didn't wholeheartedly agree with everything he said, but I couldn't argue with the success rate or those who went through and followed the steps.

My favorite part of the class was that Dave was actually funny.
I was expecting him to be a boring, old financial professor who looked down his nose and told you what you could and couldn't do with your money. Instead, Dave is funny and easy to listen to. He explains everything where you can understand it even when you have no context for the new information. He's a no-nonsense kind of person and will tell you how it is, but gives you the freedom to tell your money where to go.

That's right. YOU tell YOUR money where to go instead of wondering where it went. You're in control of your budget. As long as you're spending less than what you make, you can decide where that money goes.

OUR FAVORITE BUDGETING APP!

Y'all! If you haven't heard of the EveryDollar app, you HAVE to get it!

I'm not messing with you. This is one of My Favorite Apps on my phone. There's a great free version, but the best part is that for a small fee, you can hook it up to your bank account and automatically track all of your transactions! Seriously worth it.

I'm not super tech-y and I can get by on excel, but am not an expert by any means. The EveryDollar app is super easy to look at, customize, and use. Andy and I are believers!

WHAT ABOUT YOU?

Have you had any luck with consistent budgeting? What was the most helpful part of the post to you?

I hope you enjoyed today's topic!
If you want to see more by me, check out my full list of blog posts.

Comment below or shoot me an email at AttitudeOfAdventure@gmail.com
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I'd Love To Hear From You!

~M

Author: Morgan, Living Financially At Peace, Living Organized