Hey there, hi there, ho there. We’re working our way through 31 Days of Debt Slaying Tips. I can’t promise to bring you anything revolutionary. I can’t promise to pay your bills for you. But hopefully I can inspire you to change your mind and then in turn change your finances through this intentional series.
Day 9: Spend Each Month (or 3-6 Months) on Paper on Purpose
Yesterday, we briefly spoke about getting a good handle on precisely how much it is you’re spending each month. After you begin to get a handle on that (i.e. the water bill is always about this much, the mortgage is always $x, we spend ~$y on groceries per week), then you can begin to work on a budget.
A word or two about budgets:
- I used to hate them.
- They felt like claws around my neck.
- I didn’t like the idea of a piece of paper telling me how to spend my money.
- I felt controlled.
- I buckled at the mere mention of the word.
Now:
- I feel free.
- I know exactly when I can splurge because I have a better handle on what I’ve spent.
- I can anticipate upcoming expenses.
- I kind of feel like I’m on a game show (and I’m winning).
- I can breathe much more easily.
Often readers and at folks at speaking engagements tell me they simply can’t anticipate their income or expenses. I think this is a bit of hogwash. Yes, there are always unexpected expenses even in the Queendom. And unless you’re 100% commission based with no base salary, you have a good idea of the income flow. And even if you are commission based, there are ways to track your income and still budget.
So here’s what I do. About every 3-6 months (usually right after we pay our car insurance), I pre-fill in our Quicken Checkbook registry. I enter known salary amounts on pay days. Then I go back through an fill in known bills (mortgage, water, lights, heat, phone, cable, student loan payment, groceries, gasoline, health insurance, garbage, car insurance) on their due dates. Sometimes there are shortfalls and that’s ok because at least I know when we’re going to have to be very intentional to tighten our belts or use some of the extra income we get that’s not salary based (all which usually goes on the debt snowball) toward our regular bills. But at least I have a good feeling of what’s coming in, when it’s coming, where it needs to go, and when it leaves.
If I know there will be a particular need – books at back to school, a dentist appointment, a doctor co-pay, birthday gifts for the girls, license plates, etc. – then I will budget an approximate amount. If I spend less, then woohoo, more money to pay off debt. If we spend more, then we’re going to have to cut somewhere else to get everything to equal out.
If you don’t know exactly how much you will be making, estimate a bottom number for each month (use past income to project). It won’t be 100% on target but it’s much better than doing nothing. And prioritize which bills you need to pay first (mortgage, heat, lights, food should come first).
I use 3-6 months as my budgeting schedule because when I budgeted only one month at a time, I would consistently get a shortfall come time to pay our car insurance (rought roh!).
You can use a computer program like Quicken or Microsoft Money. Or tap into an online service like Mint.com. Or simply pull out a spiral bound notebook and a good ole pencil.
Just do something. Or you’ll never know where your money goes. Or why.
