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This week I want to cover some Basics when it comes to budgeting that I think we all can use a reminder on. I am by no means the budgeting expert so if you are looking for a help with getting your budget created and in line then I want to suggest you check out Total Money Makeover by Dave Ramsey. My goal is just to simply remind us all of the basics that so often we forget or get lazy about as time goes on.
My Number 1 Rule when it comes to Budgeting is: What Comes in Must go Out!
I was a business major in college and the equation Assets = Liabilities + Owner’s Equity was drilled into our heads because you cannot run a successful business without knowing where all your money is. In the same way, You can’t run a successful budget without knowing where you money is going!
Be In Charge of your Money!
I love to think of a budget basically as telling my money where to go. I get to decide how much goes where, I make the rules, and then I choose to live within them. Make sure you account for all sources of income when creating your budget, Include cashback and rewards programs. For Example: We have our Credit Card Points Estimated in our budget and that money is used to pay for Christmas Gifts. If it wasn’t accounted for in the budget we most likely would spend it on several small (unnecessary) items during the year, but by placing it in our budget it’s helped us to save that money and redeem it once a year when it’s time to buy gifts.
Make a List!
Do you really know where your money is going? I recently had to sit down and look back at our budget and re-commit to staying on track. In all honesty I tend to do really well for a while, then I start “Slipping” and getting lazy about sticking to the amounts for each category. Taking a look at the whole picture helps me to evaluate if the budget needs to be changed, but it also allows me to remember the reasons behind budgeting and the goals we have.
Every $ Accounted For.
Make sure you spend 100% of your income. Everything you make needs to be allocated to a budget category (Savings is a Category for us). Also, everything you spend needs to be accounted for. For us this means that we have a small Miscellaneous account that covers the random expenses like Stamps or something that you might not have a category for. It just helps us be in control.
What are your budgeting basics??? I would love to know. I’ve got a few more for you this week, but I know that I always learn so much from you guys and I would love to hear your thoughts on this subject.
