With everything going on, we’ve all got a lot on our minds these days. Even in the best of times, trying to juggle life, work, family, bills, and money can be a daunting task. And this is hardly but the ‘best’ of times right now. Yes, our health is – and must be – our top priority. If we’re alive, we’ll be able to make our way through all this eventually. But coming up quickly behind that is the fear of what this pandemic is doing to our financial health as well.
So it seems fitting in a way that April is “Money-Smart Month.” Facing a very real threat not only to our health but also our paychecks, it’s more important than ever for each of us to be as smart with our money as we possibly can be to weather this storm. So each week this month, we’re going to be focusing on different topics – sharing tips and information – specifically related to keeping you and your money safe.
The best place to start, of course, is always the beginning. And when it comes to financial health, the very beginning is Having a Budget.
I know, I know… I hear you groaning from here. But you read the headline, didn’t you? We’re going to make this insanely easy. I promise. Just grab a pen and piece of paper (or print out this handy SHINY NEW BUDGET ) and your favorite beverage and let’s get started.
Step 1: Money Coming In – Income
The first step is to figure out how much money we have to play with. (“Play”…doesn’t that sound fun?) What we’re looking for here is your NET Income – or the amount that actually gets deposited into your account or on to a paycard after taxes and other deductions – each month.
This might be what you get from your job. It might be unemployment, or Social Security/Disability payments. Perhaps you have a pension. Or a side-hustle? Be sure to add in any child support as well as SNAP or WIC benefits. In short, if it’s money you regularly receive and can count on each month – write it down.
What not to include?
That check from grandma for your birthday doesn’t count. #1 – it’s a once a year deal at best and #2 – she should be saving that for herself right now. Winning lottery tickets, a great night at the casino, or any other income that depends on chance or are one-time shots – those don’t count either. Neither does trying to sell those unwanted Christmas gifts on Ebay. I wish you luck with that, but again, it’s not regular monthly income so it doesn’t work here.
Okay, got it all? Great. Add it all up and write that total at the top of your page under Total Income. Step 1 is done. I told you this was easy…
Step 2: Money Going Out – Expenses
Now it’s time to look at what’s going out – your Expenses. No, this step isn’t much fun. But think of it like eating your vegetables – it’s good for you and it will eventually lead to desert. So let’s get this over with.
Now there are a couple of ways to go at this and none of them are “right” or “wrong.” For me, it helps to group things in categories. That way I can focus on specific areas like Home, Auto, or Entertainment. I’m less likely to forget or miss something that way and that’s how I’ve set up the Shiny New Budget Guide. But maybe you normally keep track of your bills on a calendar, and it’s easier to write them in order of when they’re due. Maybe you’ve got your bank statement and go down the line. As long as you’re writing down everything you’re spending money on each month, do what works for you.
But here’s the thing – however you look them up, you’ve got to write them down. Trust me. Until you write them down, add them up, and see them there on the paper (or typed into a spreadsheet) – it won’t be real. Our brains are really good at jumping over stuff we don’t like and moving on to shiny new things (now you know why I called it the Shiny New Budget Guide).
Don’t skip this step–you’ll never get to desert.
What to include?
Everything you can think of … and then some.
*Utilities – electric, gas, water, etc
*Cable and Internet
*Car payments or bus passes
*Credit Card payments and loan payments
*Groceries and Eating out
*Streaming services like Netflix, Prime and Hulu
Don’t forget pets, haircuts, nails, gym memberships, and kids’ activities either.
Look, don’t make yourself crazy. Write down everything you can think of. If you think of something else later you can always go back and add it in.
And for those things that change all the time – like groceries, eating out or gas? Just make a good estimate. How much do you normally spend at a restaurant – $10? $20? How many times do you go each week – 3 times? 5 times? Fine. 5 times $20, that’s $100/ week or $400/month. Round it up to $500 to give yourself a little cushion and move on.
Got it? Great!
Now add all those up and write the total under Total Expenses and we’re done with Step 2. Enjoy a little sip of your beverage (you’ve earned it) and let’s move on to the final step.
Step 3: The Sum of All Parts
Ready for the big finale? Subtract your Total Expenses from your Total Income. And voila – you have your budget! Wasn’t that insanely easy?
What, you thought there’d be more? I know, it’s kind of a let-down after all the hype about budgeting. But technically… no, that’s it. That’s a budget.
What’s important to remember is that a budget isn’t the “goal.” A budget is just a tool – it’s a tool for managing your money. Money is just a tool, too. The goal is living – living the life you want to live, doing the things that matter to you.
That’s the real balancing act.
But don’t worry, we’ll hold your hand along the way (from 6 feet away and wearing gloves–but we’ll be there). You’ve got one tool in your bag and we’ve got a lot more to share. Later this week we will be talking about ways to boost your income – specifically, we’ll be looking at how the new stimulus plan may be adding some much-needed cash to your bottom line.
Plus, now that you’ve got your Shiny New Budget all setup – I hope you’ll join us for a free online class this Thursday, April 9th, at 2:00 p.m., where we’ll be showing you how to make your budget a “lean, green machine” with The Beginner’s Guide to Emergency Budgeting. For details or to register, click here or call us at 314-256-3995.