One thing I think every #tcdbabe should have, but can seem overwhelming to create, is a budget. John and I created a budget last year following our wedding and have been utilizing it ever since. We can easily update it as life changes, but this way we each know what we are saving for, what we can spend on and feel comfortable in its components. Then, if something comes up that is not included in the budget, we can both sit down and discuss it together. My breakdown today is a simple version of how we created ours to get you started, but there are lots of ways you can do it so find what works for you. Ultimately, the importance lies in just having one!
To start, we looked at a month of normal spending. That meant, buying what we wanted and when we wanted to see just how much we were actually spending. At the end of the month we sat down and looked everything over. This was super helpful because we could easily point out where the majority of our money was going and whether or not it was appropriate.
After reviewing what we spent it was time to begin creating our budget. John and I used an excel spreadsheet, but pen and paper would do just fine as well. The first step in this is looking at how much you bring in each month. From there, you can then allocate every dollar and know exactly where it is going. Whatever that amount may be, write that at the top of your document under income. Once you have established your income, it is time to write out any payments you have to make on a monthly basis. Think rent, car payment, utilities, loan payments, etc. These will all be included in your budget as costs. Add all of these up and subtract from your monthly income. The number that results will be your spending income.
Paychecks – bills = discretionary income
Next, create a savings goal. This is important. Through creating a goal you are able to put money away for when you may need it. John and I have had multiple situations where things have come up and if we didn’t have a little money set aside, we may not have been able to afford it. A savings goal could be as simple as $300, to even $3,000. Just think about what goals you have in the future (i.e. buying a house or car), and then also what makes most sense for your life.
Now, for the fun stuff.
After incorporating bills and savings from your income, you can now determine how much money you have left over to use on what you would like. This is where it is helpful to look back a your spending records. The section is very important though so that each dollar you bring in, is accounted for. In our budget, my monthly spending includes everything from my weekly coffee to my app subscriptions. It is important to get very specific here and really make sure your money is going where you want it to go. Through your specificity, you are deciding exactly where you want your money to go and that can be very empowering versus looking at your bank account every month and wondering where it all went.
Initially, sticking to a budget can be hard. It is difficult not being able to just swipe when you want to swipe. But after a couple of months you begin to see how much you are saving and how much money you used to waste on frivolous things, which feels really good.
I hope this post made sense and please comment below if you have any questions. I would also love to know if you all would like to see more on this type of topic!