Friends and fellow readers,
Hello and happy fall to you! I hope you’ve been able to get outside and enjoy the changing leaves and cooler weather. We are so blessed to live in a place that has changing seasons, right? Hot tea weather, boot weather, pumpkin weather (shout out to all my lady friends!), sweater weather (what up The Neighbourhood), sit inside and binge watch Game of Thrones weather…I think you get it. I don’t think I could live in a place that was constantly warm or constantly cold. Change is always good. Speaking of change…today’s subject is on money (get it??). Or budgeting, specifically.
Budgeting. It comes off as a scary notion. The idea of setting aside money for certain parts of your life, figuring out what you spend your money on, realizing how much money you need in order to make ends meet, and then realizing how much money you spend on things that are unnecessary.
My initial experience with budgeting was in the first semester of my freshman year in college, in 2008. I came to college with some previous money from jobs, money gifted to me at graduation, and a specific amount of money each month from my parents for my “budget”. I remember calling my mom one evening in tears, telling her I had $80 left in my bank account and I couldn’t remember where all the money went. Money disappears fast when you don’t know where it is all going. Since then, I have budgeted my life away…and I love it. My dad and mom bought me “The Total Money Makeover” by Dave Ramsey. They challenged my brother, sister, and I to read through it and try out the budgeting ideas. I’m sure plenty of you have heard about it or even follow his points. Dave Ramsey’s motto for the book is, “If you will live like no one else, later you can live like no one else.” I found out that they challenge is me. I needed to make a change in my life that would help the present and the future. There are a million details in the book that will speak to each person in their own way (like getting rid of credit cards-I don’t 100% agree with, that’s a whole other blog post; information on purchasing vehicles; not going into debt or making payments, etc).
I use the basic envelope system that he teaches, along with ways of paying off debt, and creating a savings account and emergency fund for myself. I began by making a list of the things I had to pay for, currently having many more things I pay for compared to in college. The things in my life that I have to pay for each month (expenses) are rent, health insurance, car insurance, the energy and internet bill, tithing, food, gas, phone bill, and my gym membership. I pay these either with a check or my debit card. The other additions are entertainment, blow money, gift money, recreation fund, car replacement fund, emergency fund, and house supplies. I pay for all of these with cash, which are in my envelopes. The latter list can be adjusted each month, depending on the amount of money I make per month. This works for people, like myself, that are paid hourly, rather than on salary (which can be a bit easier, with fewer adjustments). Dave Ramsey says that it takes up to 90 days to get a budget ironed out down to the very last penny. Since my multiple job changes in college, moving back to Bozeman, adjusting jobs here at home, and rent being raised, my budget has never stayed the same for much more than 6-9 months. You should see my budgeting notebook, all the crossing out and rewriting, and the addition problems! But, I can say that Dave Ramsey’s total money makeover has helped my bank account grow in ways I never could have imagined. (www.daveramsey.com)
I paid off my student loans within a year and a half of graduating college, I was able to save up for skis and bikes, and go on a vacation to Hawaii this summer, all while being able to comfortably pay for the necessities in life. Since figuring out my budget, I have also created a “Vacation Fund”, which helps me pay for trips that I want to take each year. By putting aside $50 to $100 each month from my paycheck or a certain percentage of my tip money, I can now pay for an awesome vacation or a few small vacations.
An emergency fund is an account I could not live without. Dave Ramsey challenges his readers to put aside up to three months of pay in an account labeled as your emergency fund. Do not touch this money, unless you are in dire need. This is money for if you lose your job, hours are cut at work, family emergencies, etc. I have also found (since I am paying for my own insurance), that I need to save up for any injuries or doctor visits. We all have a certain amount of money that we must pay, before insurance covers the remainder (a deductible). This is money coming out of your own pocket. Where is that “out of pocket” money coming from though? Create an envelope for that, so you are prepared! (thanks mom for reminding me of this important detail…)
Another important part of my budget is tithing. Tithing is the process of giving one tenth of your earnings away. In the past, it was taken as a tax for the church. Today, I give one tenth of my monthly earnings to Fresh Life Church (www.freshlifechurch.com). It is not required but requested of us, as followers of Christ, to give back to Him. He has blessed me with my current jobs and continues to provide for me, even when I feel like I may not make ends meet. I used to find it hard to give this money away, but I have realized (since I began providing for myself) that giving back to the person that has provided so much for me, is a huge blessing and honor. I have never once not been able to pay for the essentials, even in the tightest of months.
Dave Ramsey said it well, “You will either tell your money what to do, or the lack of it will always manage you.” I get a lot of grief for being strict with my budget. Budgets are not supposed to be scary and leave you no room for spending. A budget is something that YOU create. It is based on how YOU want to spend your money (within reason). If you want a coffee fund…create a coffee fund! If you want a shoe fund (duh)…then create a shoe fund! I have a “going out fund” so that I can buy beers and coffee and ice cream, and not worry about it. Also..FYI. These $2-$5 charges add up over the month. So budget for them. Again, it’s up to you where you want your money to go. It’s not bad to spend your hard earned money on something nice for yourself, like a cup of coffee or a new shirt! But please consider that “personal finance is 80% behavior and only 20% head knowledge” (thanks Dave!). Keep yourself and your money in check.
Money does not have to be a problem or a stress. Be wise. Seek help. I am by no means perfect with my budgeting. The past few months with job changes and adjustments with hours have put a lot of stress on my bank account. Thank goodness for emergency funds and extra money from previous months. My parents have been a huge help with helping me figure out my budget, as well. My mom even told me that she loves numbers…I knew that was my invitation to ask for her assistance. There are many ways that people budget, not just Dave Ramsey. I challenge you to try it though. Don’t stress over something that YOU can change. You just need to set aside the time to sit down, count out how much you make per month, split it up into the necessary funds, and live by that. No short cuts.
Friends, I hope this spoke to you. If you have any helpful hints on your budgeting, I’m all ears! Please comment below or message me.
Enjoy your Friday!