Have you ever made it to the end of the month and wondered, where did all my money go? Money can be stressful, overwhelming, and seem totally out of control.
I get it, making a budget sounds boring and restraining.
This month try something new: run the business of you. Instead of “budgeting,” be Chief Financial Officer and manage your money like a business. Before next month starts have a plan for your money.
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Before next month, here are four questions to ask yourself (or budgeting 101).
1. What’s my income for the month?
This is easy enough, right? What do you expect to make for the month? Tally up your total income for the month by adding paychecks you expect to earn from your full-time job, plus any additional income from part-time work, side hustles, bonuses, or overtime pay. You’ll also want to add your actual bank account balance to see income you have left from last month.
2. What are my fixed expenses for next month?
The beauty of personal finance is the bulk of what you spend is entirely known, literally fixed, and 100% in your control. It shouldn’t be a shocker how much your rent is! you signed up for that! Map out what your fixed expenses are for the month. What’s your rent or mortgage, insurances (car, home, health, and life), services (cell phone, internet, and cable), and your current debt payments (student loans, car payment, credit cards, etc). Your utilities like water, electricity, and gas aren’t fixed, but they are regular monthly expenses that you can map out ahead of time.
3. What are you going to spend on flex or operating expenses?
Here’s where budgeting 101 really kicks in. You know your income and fixed expenses. Before next month estimate your flex or operating expenses. First your forecast your day-to-day Plain Jane regular expenses like food, gas for your car, small gifts, clothes, and going out with friends. Food and entertainment are areas that people easily overspend. For day-to-day purchases take the guesswork out of budget and take out a set amount of cash for each week. This will help pace your spending throughout the month.
Studies show you spend 12-18% less when you use cash. Learn more how this brilliant system for managing money works here. One girl paid off over $45,000 in debt in just 28 months. Here she explains how weekly cash was her “magic pill,” with managing money.
4. What am I going to spend on any larger or irregular purchases for the month?
As CFO mark out ahead of time if you have any big purchase for the upcoming month. These can be divided into five categories: medical (prescriptions, doctor’s visits, vet visits, scheduled surgeries, etc.), maintenance (car or home), projects (furniture, house projects, moving expenses, etc), celebrations (birthday gifts, attending weddings, baby showers, etc.), travel (vacation, hotel, airlines, weekend trips, etc), and fun (electronics, conferences, concerts, haircuts, wardrobe update etc.)
You’ve just passed on budgeting 101, before next month, answer those four questions. It takes the guesswork out of budgeting.