I used to cringe when I heard the term, “Budget”. But then life smacked me right in the face in 2020. Not directly because of Covid, well, technically part of it was because of the pandemic, but long story short, we had an emergency arise in our family, my husband had to have emergency back surgery and I was furloughed from my nursing job for 4 weeks, basically laid off. My husband is a Farmer, and in April/May we needed to plant our farm crops of corn and soybeans.
Well, my husband wasn’t able to even climb up into the tractor and since I was home from work, I was voted to play Farmer for the season. I literally had to plant hundreds of acres of farm crops that spring…WTH. I didn’t even know how to drive a tractor let alone plant the seeds to make a crop. But, you see, I didn’t have a choice, it was either pull up my big girl pants and get to planting or our family couldn’t make ends meet financially.
Me and “Big Betty”, the tractor I drove and planted crops with
We rely on our farm income to keep a roof over our heads and food on the table. Farming is my husband’s full-time job. So, I got to work, planted the seeds, and we had a decent harvest that fall. It was in this difficult season of life, that I realized, while driving a tractor 12+ hours a day that we were drowning in debt and didn’t have enough money to hire someone to plant our crops. This was an emergency situation, and I am forever grateful that I was furloughed from my nursing job so I had 4 weeks to plant our crops. God was looking over us!
I realized at that moment that a budget, simply a plan for our money was NEEDED and it was needed NOW.
So, I binged everything I could related to personal finances, set up our financial goals (pay off all our personal consumer debt and build emergency savings), tracked our spending, created our family budget, and got to work.
I went back to my nursing job after 4 weeks and I was able to pick up all the extra overtime I wanted. I swabbed a lot of noses looking for that pesky covid virus. I paid off my SUV loan 3 years early, paid off over $100,000 of debt in less than 2 years, and built up our emergency savings. I did all of this because of our budget.
Having a budget is as important as anything else in life. I am a firm believer in this. Your budget doesn’t have to be as in-depth as having 40+ categories and tracking every single dollar, however, it can. Your budget could be a simple, “3 bucket system” or using cash envelopes for most purchases and spending. My point is, that there are many different types of budgeting methods, you get to pick out the one that will fit your lifestyle and personality the best. (I also have multiple blog posts on each type of budgeting method, head to https://www.jesswaynecoaching.com/blog to read them!
But having a budget is simply having a plan for your money. This way you will know where your money is going. I used to ask myself all the time, “Where is all my money going?” Or “Where did all my money go?”
I would get paid and in a few days or a week, my money seemed to just disappear. Don’t let your money be like your socks that disappear from the dryer. Make a plan for your money! Be sure to check out my FREE Budgeting 101 online course, https://jessica-s-site-d45b.thinkific.com/courses/free-budgeting-101-course
Here are 10 Essential Budgeting Tips:
1. Track Your Expenses: At least in the start, I want you to track your spending. Yes, for every single dollar you are spending, I want you to write it down or keep track of it using an app or spreadsheet. I have a customized spreadsheet I gift to all of my 1:1 clients and I also recommend and use The Every Dollar App (the free version). I’ve also heard really good things about the YNAB (You Need A Budget) app, however, this is a paid app. Remember, you don’t have to track your spending forever unless you are a little crazy like me and you want to and enjoy it! But, it is a good idea to track your spending for 3 months and then reassess.
2. Set Financial Goals: Yes, this comes before creating your budget, because your financial goals should be reflected in your budget. Where do you want to be in 5 years from now, financially speaking? Then decide what you need to do each year to achieve that goal. What do you need to do each month to get you to your goals? If you want to pay off all of your consumer debt in 1 year, how much is that per month? Having SMART Goals (Specific, Measurable, Attainable, Realistic, and Timely-they have a time frame attached to them) will help keep you motivated and on track with your finances and budget. Be sure to write your goals down, pen to paper!
3. Create a Realistic Budget: Ideally your budget method of choice will reflect your income and your expenses. Your budget (aka your plan) should also reflect your values, the things that are important to you should be included in your budget. For example, if you value travel, you should have a category or spot in your budget to save up money so you can still travel, yes, even if you have debt you can and are allowed to travel! Just save up for it and stick to your plan. I also want you to focus on paying down your debt, especially your high-interest-rate debt. Make sure your budget is realistic and isn’t too restrictive or it will never work for you. Then once you’ve created your budget- stick to it! Don’t forget to include upcoming expected (but sometimes forgotten) expenses on your budget, think back-to-school, lunch money for school, school pictures, Christmas spending, after-school activities, and sports. My budget has a hefty, budgeted amount in our youth sports category every month because my 3 boys are each in about 3 different sports throughout the year.
4. Prioritize Your Spending: Make sure you are spending your household income on your needs first, debt repayment, savings, and then your wants. Discretionary spending always comes last. If money is tight, you might need to wait on buying those “extras”. Start with budgeting and paying for your 4 walls first, these include your shelter (mortgage or rent), utilities, basic food (groceries not eating out), and transportation. You want to make sure you have heat and electricity and a roof over your kids and your head before upgrading your phone. Internet is not a NEED, but it sure makes life easier, I know! Automating as much as possible is also something I recommend to all of my clients. Set it and forget it, so set up automatic debt- payments, or auto bill payments. Do this with your savings as well! My retirement and other savings accounts are set up automatically, so on the 1st of each month my money goes from my checking account into my savings and Roth IRA automatically.
5. Save for Emergencies: When you have debt, especially high-interest rate debt, I suggest aiming to have some money set aside in a savings account to be used ONLY in case of an emergency. I suggest starting by saving $1,500-$2,000 into your starter emergency savings fund/account. Once your debt is paid off, or while paying off your debt, depending on your goals and what makes you feel safe and secure with your money, then you can work on beefing this account up. A fully funded emergency fund is 3-6 months of your household monthly expenses saved in a savings account, ideally a high-yield savings account (HYSA). I use Ally.com for my HYSA because I get a higher interest rate on my money that is sitting there waiting to be used for an emergency. I always say it isn’t a matter of “if” an emergency will happen but “when”. Emergencies are bound to happen, sometimes they come in groups, so I want you to be ready. We had 3 emergencies in one month not too long ago, a broken arm, an ER visit for abdominal pain, and a major car repair. I sure was glad we had our emergency fund to pay for these bills. Getting your starter emergency fund in place, remember that is $1500-$2000, is a priority. Work extra hours, sell items from your house, pick up a second job, and do whatever you can do to get this money saved ASAP.
6. Avoid Impulse Purchases: We’ve all been there, buying items we don’t need because it feels good, or your kid is begging for the stuffy at the zoo (this was me the other day), or it is on sale! Yep, guilty of all these things. But the thing with impulse purchases is that every little thing adds up and it takes us further away from meeting our financial goals. Some tips I use are to try not to take my kids (or husband) to the grocery store with me! I also don’t go grocery shopping when I am hungry, I use the grocery pick-up as much as possible, stick to my list, and don’t go “window shopping” because then you are going to want to buy something and you will have to keep telling yourself “no” or you will give in and feel guilty about it—no one wants that. Before every purchase ask yourself, “Is this a want or a need?” If it is a true need, go ahead and buy it, but if it is a “want” wait at least 24 hours before purchasing and only purchase it if it is within your budget! More often than not we don’t REALLY, TRULY want the item, we just think we do. Oftentimes I will put something into my Amazon cart and wait a few days before clicking, “buy”. Guess what? Most of the time I forget about the item sitting in my cart or I decide I don’t really want it.
7. Use Cashback and Rewards Programs: I use Ibotta (a free app) for cashback, but I make sure to only buy things using it that I would already be buying. Things like laundry detergent, yogurt, cheese, tampons, cereal, etc. There are many cashback and reward programs out there, but make sure to do your research on which ones are worth the effort and make sure you aren’t buying more items than you need just because you get a few cents back from the cashback program.
8. Plan Ahead: My budget is reflective of upcoming seasons and events as I touched on earlier. Think Christmas. Christmas is the same date every single year. So, I plan ahead for Christmas spending and automatically save $100 per month into a Christmas savings account at Ally.com. So, come December I have $1200 to spend on all Christmas-related expenses, including gifts, extra food, travel, decorations, etc. This works great for things like back-to-school, and annual subscriptions (hello, Amazon Prime, and Costco). How about auto insurance or auto registration? I also budget for upcoming birthdays (for my immediate family of 5) starting a month or two ahead of their birthday months, plus I have a base amount budgeting into our “gifts” category throughout the year for the months that we don’t have our immediate family’s birthdays. This money that is budgeted for “gifts” includes friend’s birthdays, anniversaries, baby showers, and wedding gifts. Your kiddos are bound to get invited to friend’s birthday parties and I don’t want you to tell your child they can’t go to the party because you don’t have the money to buy a $20 friend gift.
Examples of savings accounts at Ally.com
9. Review and Adjust Your Budget Regularly: It is important for you to know and remember that your budget isn’t going to be perfect. I have been budgeting for years now and I help my clients create their own budgets and my budget still isn’t perfect every month. Things are going to pop up and I want you to give yourself Grace. But with a budget, it is a good idea to review it and adjust it as needed. I create my family budget new every single month but many of my categories and amounts stay the same, but not all of them. Make sure you are reviewing your budget at a minimum of monthly, but even a weekly check-in is a great idea. Having a budget date with your partner is a way to make sure both of you are on the same page with your finances and to allow for open and honest communication. You can make this fun, by cooking a delicious meal at home or even going out to dinner at a restaurant, kid-free, and discussing your budget and plan there.
10. Seek Financial Education and Support: This is where I come in my friend. You can google everything these days, however, it is likely to take you way more time, energy, and even money to DIY. By hiring a Financial Coach, like me, you are bypassing all of the frustration, stress, and overwhelm (that you’ve likely already been facing). You will go straight to a support system and someone who has been in your shoes. Remember, I was drowning in debt, had limited savings, and fought my way out. I wish I had known about Financial Coaches and that help was just a message or phone call away. By hiring a Financial Coach, you will save time, money, and energy. You can find me at https://www.jesswaynecoaching.com/
Remember, a budget is simply a plan for your money so you have control over how much money you are spending on where you are spending your money. A budget doesn’t have to be restrictive unless you need or want it to be. Make sure to write down your financial SMART Goals and also some life goals while you are at it. Be sure to seek support, I would love to help you with creating your budget so you can still live a fun and joyful life while making progress on your financial goals. I can work with you virtually as well as in person if you are local to me J
You get to create the life you WANT to live as opposed to keep living the life you are supposed to live. I want you to create this life while making smart money moves.
XOXO
Jess Wayne
