Let’s accumulate more green! I want you to do more than survive, Cronies. Floundering about without a solid spending and saving plan can leave you treading water, and struggling for air. Put on your goggles, baby. It’s time to find the money.
Create a budget.
An oldie but goodie, Cronies. Like a good parent looking after your children, you have to know what your money is doing. If it is bored and has nothing to do, it could get into trouble. You must keep it busy by delegating every penny to a planned payment. I keep my monthly budgets in a dedicated mid-priced notebook. If you have never created a budget, it’s time. And it is easy, so don’t stress. You can find great budget templates all over the internet, but I prefer to handwrite mine. The extra energy and focus makes it real and important.
This is all about you.
You should have a list for monthly expenses and a list of monthly income amounts. Here are just a few examples of items on a list:
The rent or mortgage is a no-brainer, but if you don’t have home insurance and property taxes wrapped into your payment, then add them separately to the budget list. Find out a monthly amount by dividing your payment by 12 if you pay annually, or by 6 if you pay every six months. If you are renting, include your renter’s insurance payment.
Electricity,heating, and water.
For most of us, this number changes every month, depending on usage or season. To make your life a little easier if you are a budget newbie, call your utilities company and ask to be put on a budget plan, which estimates your annual usage and divides it into 12 equal payments.
Auto loans and maintenance.
Like your shelter, there are probably additional fees you pay over the course of the year. Oil changes and maintenance, gasoline, license plates, registrations, etc. should all be calculated as best as possible and added (a separate line for additional expenses is good, just so you are aware of your expenses.
List all your expenses on this budget sheet – all of them. Include entertainment, transportation costs, food, association fees, school lunches – everything. Rack your brain for everything that might require payment. How about birthday gifts? Yes, they need to be added. Tally last year’s amounts to come up with an average cost for this first budget.
Now. Take a deep breath. Add the amounts.
Yep. This is grown-up stuff. It is shocking to see the total, isn’t it?
Knowing is growing.
You just made a huge step in the right direction. Knowing what you are spending right now brings you to a new awareness of your ability to become wealthy. A budget is a recipe for a potion, but it is a recipe that must be carefully adapted for each person in order to work properly.
So now what?
Let’s create a line for income.
Yay! We all like to see the money come in. But do we really know how much we are earning?
If you work for someone else, you receive a paycheck with taxes already deducted (we won’t get into that, yet.) If so, the amount of the check what you write down. You might be a contract worker and do not have taxes deducted from your pay, and in that case you will need to calculate how much of that check should go to taxes. You will need to deduct that amount and deposit it in a savings account dedicated to tax responsibility. I know, it hurts. But you will be very happy to have that money accumulating when the government asks for a big chunk in April.
Make sure you include all income sources. Do you shovel snow or mow lawns for extra cash? Work part-time on the weekends? Sell handmade items on Etsy, or list used keyboards on eBay? Everything counts. Total everything.
Now you have an amount for money coming in, and an amount for money going out. Subtract your expenses from your income.
Another growing moment, eh?
It’s okay. This is the first step to better days.
Let’s say your income total is larger than your expenses. Good on you! You are living within your means. But we won’t stop there. Because you need to add a line to your expenses. Write down, “Pay Myself.”
Pay yourself. This is the most important part of budgeting. You see, shelter, food, and other expenses are not paying you. That is called breaking even. Do you want to put money away for your future, or do you want to keep working and breaking even?
The minimum amount should be 10% of your income. If you make $2000 per month, you should have a payment of $200 to yourself, to be stashed in some sort of savings or income producing plan. So go back to your original budget list and add 10% of your income to your expense sheet.
My hope is that every penny and no more is being used. Pennies need jobs.
But it could happen that when you looked at the difference between your income and expenses, you had more going out than coming in. We need to fix that.
But you also need to go back to your budget list and add a line called “Pay Myself.” What? You ask how you can add money to the expense list when you are already in the red?
Because your goal just got higher.
You can do more than break even. Make a vow never to shorthand yourself again. You have the power to expand and accomplish more than you think. Yes, you will have growing pains and want to ignore your little penny children, letting them get bored with things as they are and go back to their unruly ways.
You now know the real numbers. You can do something about them. The first step is to reduce expenses wherever possible. Cut back on entertainment – but do not cut it completely out. All work and no play makes money dull and scroogey. Eat at home more often and make dining out a special occasion. Turn off those lights when you leave a room, and switch to LED lights. Make it a family game to find free or inexpensive ways to see movies, exercise or entertain.
Next, consider adding a side hustle to your income list. Here are a few ideas. Is it time to ask for a raise? Is your boss looking for someone to put in some extra hours? Keep your eyes open for opportunities.
You can do this. Study ways to earn more and spend less. Take advice from this who have accomplished it. You deserve better, and when you have it you can offer so much more to others.