Did you know that you need to budget? It is one of those adulting things that ought to be at the forefront of your mind. However, it often is not. You think to yourself “I’m no good with money,” “I don’t have enough money,” or “I don’t have the time.” But, regardless of how good you perceive yourself to be with the money, or whether you have enough money or time, you still need to budget.
Over the next several weeks I will be walking you through a budgeting series that I have been considering for quite some time. I have had many people email me over the past year as I have shared a bit about my own budgeting journey. I am not a financial adviser, anything I share with you will be from my own personal experience.
Grab my budget workbook & printables that go with this series HERE
Why do you need to budget?
The main reason why you need to budget your money is because if you don’t, your money will still leave your hand, you just won’t know where it has gone. Is there more month left at the end of your paycheck? Do you struggle to make ends meet? Or do you make good money, but wonder why your savings isn’t increasing. Unless we are spending and saving money on purpose, ie budgeting, we are not being good stewards of our finances.
I have always loved budgeting. And I have always felt as though I am good with money. Do I make dumb decisions sometimes? Absolutely, but in general, I have always had a good idea about managing money. All growing up I enjoyed math, all of my cousins majored in math, my mom was great with money, so I never had any self-limiting beliefs about money. However, I know that a lot of you struggle with not knowing exactly where to start.
The first step that I want you to take with budgeting is to make sure that you do not have self-limiting beliefs. I want you to be good with money. You want to be good with money. And the only way that you can be good with money is to believe that you are. Of course there are more steps involved to be financially savvy.
You may be in a fake it till you make it season, but that is 100% OK. Know that I am here, cheering you on as you go.
You may not realize that you have self-limiting beliefs when it comes to money. Oftentimes we aren’t even aware of the self doubt that we have, and it takes a while to even pinpoint it. I want you to take a few minutes and think about money, your relationship with money, if and how you budget already. Write all of this down, and then read through it. Do you have some self-limiting beliefs when it comes to money? How can you change your thinking and put those beliefs into a more positive, encouraging beliefs?
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You Need a Budget: Bank Statements
After you correct your self-limiting beliefs around money, the next step is where the work begins. You need to know how much money you bring in each month. And then you also need to know where you are spending your money each month. This is regular, recurring expenses, this is debt, and this is miscellaneous expenses that come up throughout the year.
The best way to do this is to print out all of your bank and credit card statements. I would recommend printing them at least for the past 3 months, but if you are really committed, looking as far back as a year can be incredibly helpful. Income and especially expenses can be seasonal. You know that at one point in the year you are going to focus on holidays, you know another part you will be focusing on homeschool curriculum and resources. So, if you have access to a year’s worth of statements, I would start with the 3 months and then expand.
After you have all of the bank statements in front of you, it is time to start sorting. It can be a bit challenging to do this part, especially if you have a lot of credit card statements. You won’t necessarily remember exactly what the purchase from Amazon was 3 months ago. However, you can login to Amazon and go and look at what was in that particular purchase. The same is the case for most online retailers you purchase from. Even places like Target, Walmart, and your local grocery store track your purchases if you use some sort of rewards program.
This is the not-so-fun part, unless you really like to categorize things. Fortunately for you, I love to categorize purchases, so I made a workbook & printable pack to help you. You may have additional categories in your own spending, and this is going to be a big part of the budgeting process. Understanding the categories where you spend your money is going to help you figure out how much you need to budget in those categories when we move to the actual budgeting process.
The Bottom Line
Your challenge for today is to go through at least your last 3 months of bank statements. Any spending that you have done, you need to group it into specific categories. Make sure that you have a “cash” category for any incidental purchases that you used cash for. These are the purchases that are easiest to miss because you are using cash.
It’s OK if these categories are not perfect. You mainly need a general idea of how much money is coming in, how much money is going out, and where that money is going. We will begin to sort through all of this information in my next post.