Tips for Establishing a Budget, if You’ve never done it before!

Since September really has been a money motivation month for me, I decided to keep the trend going (and keep ya’ll up to date on my success…and failures) in spending, saving and keeping on track with my budget.

Last week I talked a lot about going through my finances and tracking my spending habits.  And how I discovered I spend nearly $700 a month on shopping alone.  I established a little budget for myself to cut my shopping habit in more than half. Going from $700 to $250 will definitely be challenging, but I think I can do it!

So after I picked up my jaw from the ground. I got to work. I know where I spend the most money (shopping and groceries) and I am really good at tracking my bills. I know exactly what bills I pay each month, how much and when. Creating my “extras” budget and incorporating that into my bills list will be a little more challenging.

Initially I thought to incorporate a cash system. Once the cash is gone, I’m done for the month. But I decided against it. Because the places I do shop at…I have rewards cards for (not all are credit cards) And its really worth it to get the benefits from those cards.

I even thought well I could split off my funds into different bank accounts. Way too much hassle and in the very near future I’ll be relocating overseas and I dont want to have to close 5 accounts…

Figuring out a system that works best for me is going to be tricky, but my Sister suggested I check out Mint to keep track of accounts, budgets and everything all in one spot. I used to have a bank account with a bank I worked for and they offered a similar feature. It was pretty awesome. When I left the bank, I dropped the account because ultimately I love the account I’ve had with Chase for 10+ years. So Mint is a great replica of that program I had at my other bank.

Mint really is awesome. I’ve noticed it is a little ad heavy (which I just delete, I really do not want or need any new credit cards nor am I looking for mortgages) but once you skip through the features are super beneficial.

 

see_all_account_hero

You can add ALL (or almost all) of your accounts, from your student loans, to your savings, to your credit cards. You can connect directly from those accounts through Mint and they update regularly (who needs to remember 35 million passwords, when all you need is one!)  I did have a little trouble adding my only store card, but I pay that in full every month so I wasn’t too worried about connecting it.  Its nice to see an overall view of all your accounts. I unfortunately know exactly how much I owe in student loans…if only that number just vanished.

But it really was the budgeting feature that sold me. Even though I’m completely a list maker, I like to write it down over and over again ( my apartment and desk at work are filled with scribbled lists and notes of what bills I have due, how much and when) This is nice though because I can still keep my notes just without the math. I hate math.

budget_bar_chart

You can set up pre-determined dollar amounts and the app automatically calculates and categorizes based on the transactions on your credit cards/bank accounts. You do however have to add cash in manually. When I do have cash it lasts like 2.5 seconds, so I have to remember to enter it right away. It really is convienent to see my budget in a colorful, adjustable format. But mostly I like that it tells me how much I have left in my budget for that particular category for the month.

goals_how_youre_doing

On top of the budget feature you can also set goals. It also calculates how much you would need to put towards that goal if you want to reach it by a certain date. Or if you want to contribute say $200 to a savings account, how long it will take you to reach your goal. The first goal I put in was to have $10,000 by summer in savings, the way it calculated it for me was literally impossible for me to accomplish monthly. Requiring me to deposit $1000 a month into savings. Yeah…not happening. It tracks what you already have, how much lef you have to go and when you’ll complete your goal. Kind of a nice visual feature of your progress.

Its also available for an app on your iPhone, which I check regularly now. As I always have my phone on me and I can easily make adjustments if necessary.

Setting a Budget

So now that I have this nifty little program to help me keep track of my budgets I really needed to set some. My bank statements showed me some pretty average numbers, I knew how much on average I was spending at the grocery store/eating out etc it was more about frequency. Cutting back my frequency of things really is the backbone of my budget.

Groceries

I went over my spending habits and determined which areas I could really cut back on. My groceries were a easy target. I typically go grocery shopping once a week and don’t normally spend over $60 at Trader Joes. But it was all the little $20-30 trips to Walgreens that were adding up. I’m still going to stick to my weekly trips to Trader Joes as a lot of the stuff I buy is produce and perishables. But my trips to walgreens are going to be reserved for things I can’t get at TJ’s, like saline solution, big packages of paper towel/toilet paper and cosmetics. No more quick trips for a bag of potato chips or some Arizona Peach Tea. Eliminating those trips should cut my grocery budget from $300 in actual spending to less than $250. (not a lot but still a difference)

Eating out

The other place to cut back drastically is my eating out/entertainment. I spend on average $150 a month. Mostly on coffee in the morning and lunches during the week. Cutting the coffee out alone saves me probably $20-30 a month. I have a Kuerig…I should be using it instead of getting Dunkin Donuts. I still want to be able to go out to lunch with my coworkers but 3-4 times a week is more than I should be. So I’m going to limit my lunch trips to once a week. That will cut it from $30-40 a week to $10-15 a week.  A pretty dramatic difference. The eating out budget I realistically can cut in half.  I’ve stopped going out on the weekends, (other than for special occassions) which saves tons, not only on alcohol but also in hangovers and taxis. I’ve come to learn my body doesn’t really like alcohol that much. Of course this portion of my budget will be a little flexible, as people have birthdays, or I see friends I dont see often and other random special things.

Travel

Like I’ve mentioned before, I incorporated my public transportation into my bills automatically. So that is an unchanging dollar amount each month. When I first got back from Argentina, I was super lazy and took cabs everywhere. I think I spent like $70 in cabs in June…toooooo much when I could walk 5 blocks or wait 10 minutes for the bus. I rarely drive so I maybe fill my tank up once a month. Its a pretty easy area to keep low, its just making sure I don’t cab it everywhere. Which is easy if i’m not going out…or shopping.

Shopping

My first step in establishing a shopping budget was to write a list of things I need/want. I’ve always had a sorta list in the back of my mind…Like I know I need a chair for my desk or a beige blazer and knee high boots for fall. Some of it was in a list, or in random places written down or on a pinterest board. But now its all in one place.

To keep track of my ideas for the blog, I started jotting things down in a little notebook. I carry it with me everywhere. So obviously this is an excellent place to keep a list of clothing/shoes/home goods that I need. Establishing this list will hopefully keep me from impulse shopping and buying random stuff I don’t need.

Some of my items on my list are pricier (good boots are likely to run me at least $100 and a chair is likely to be at least $100 if I can’t find it on CL). Most of the items on my list are shoes to be honest. When I sprained my ankle last october my entire shoe collection pretty much got donated. I can’t wear heels like I used but now I’m slowly wearing them again so its time to replace with some good staples. As the weather gets colder, adding sweaters is essential.

Now that I know what I need, and determined that I need to cut my spending in half. I decided $250 was a good number. It allows me to get what I need and have a little wiggle room. Plus I decided I’m going to roll over any extra funds to the next month. Again, like with groceries, the shopping trips I made are on average around $60-70 but it was the frequency of the trips. Shopping 2, 3 & 4 times a week at $60 each time adds up super quick. Cutting back to maybe once a week or twice a month is going to be the most difficult part. But I’ve been doing great so far!

Establish a No-Spend Week at least once a month. 

I really didn’t think I could do. And I was about 90% successful. Between a birthday at work and a going away party I spent a total of $20. I also bought groceries, which ran me $50.  Since it was such a success I’m going to do it again this week. Even though I still spent and I wasn’t 100%, to me its a success; compared to the hundreds I spend each week, spending only $20…definitely a big change! This week I’ll allow myself one day again for lunch, and I’ll likely be staying in this weekend (working on the blog!) to avoid shopping. I have some craft projects I’ve been meaning to get to and some sewing to get done as well. Not to mention try to do some meal planning as well.

After reviewing my last week, I really feel the no-spend week is super beneficial to me. Its almost like a competition to myself to see if I can do it. I want to see how long I can do it for! Plus its giving me motivation to create new content for the blog!

Keep yourself Organized! 

Whether it be a binder, a notebook, apps or excel sheets or all four. Get yourself organized and create a system that works for you. I like a combination of all four. I created these templates which I currently house in a folder but I’ll be switching over to a binder. It allows for me to see everything all laid out clearly and I can either write in things or update them on my computer through excel (yay for no math!).

Finance Checklist: A really simple list of the bills I have to pay, when they’re due and how much they are and if I’ve paid them! The only thing I haven’t added on my Finance Checklist is a line for adding to my savings, Starting this month I’ll be contributing to my savings just as it were a bill, even more when I pay off my credit card. Also there are random expenses/bills like the medical bills I have to pay (which are a lot)that are not included, plus things like parking tickets, vehicle registration and my student loans etc. Now that I’ve established this budget and a strategy, I’m going to start paying those (the medical bills) down as well. So those will get added to the list. Hopefully by the end of the year I’ll have a healthy chunk of medical bills paid down and a big chunk into my savings!

finance checklist templateMonthly Budget: My monthly budget lets me see exactly where my money is going. How much my budget is, if I go over or if I have left overs which will transfer to the following month’s budget.

Monthly Budget Template

Even though I’ve just started this budgeting journey, I’m confident that it will be successful. I’m super motivated. I have a TON of huge purchases to make in the next year and I’ll be in a completely different financial position this time next year. I’m hoping to knock out a good portion of my debt by them, rack up huge savings and still be able to do all the things I need by then. I’m super confident about the savings, its the debt part I have to tackle with full force. Its doable. I’m already making dents by paying off my car and getting my credit cards paid down quickly.

What methods of budget tracking do you use? How did you establish your budget? I’d love to hear your tips and suggestions. 

 

 

 

 **All opinions on this post are my own, I was not compensated or affiliated with Mint.com***
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One thought on “Tips for Establishing a Budget, if You’ve never done it before!

  1. Pingback: 10 Things I Learned About Money in 2014 | The O Guide

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