Budgeting may just be the biggest game changer for us!
Prior to starting our debt free journey , we wrote a ‘budget’ every month but clearly something was wrong because we still had no clue where all of our money went.
Here are some of the ways we failed:
- We never looked back at the budget after it was written
- Our numbers were unrealistic
- Important categories were missed
- If there was additional money, we never knew where it went
Although not perfect, we can say that we are 10 times better at budgeting today.
Fast Forward to Now:
We use 5 steps to complete our budget monthly.
STEP 1: Set goals – We write a few goals to keep ourselves on track and to be purposeful e.g. complete 15 no spend days, stay within our grocery budget. At the beginning of our journey, our goal were simple, don’t use our credit card or touch savings.
STEP 2: Identify our Income and Expenses for this upcoming period
STEP 3: Create and tweak your budget – We have a scheduled budget meeting every month. There are many ways to create a budget, you can keep it simple with paper and pen, using excel or google sheets. There are also some good free budget apps available for download. Choose one that is easy and fits your lifestyle.
STEP 4: Keep track and reconcile – this step is super important to completing a successful budget. We use google drive to store our budget. After each transaction the budget sheet is immediately updated. Reconciling keeps you abreast of how much money you have available in each category.
Remember that time when you thought your bank account had $300 but it was really $50 when you checked? Exactly!!!!
STEP 5: Plan to do better next month – Rome wasn’t built in a day. Budgeting is a never ending process, some months are better than some. Give it your all and don’t dwell on the negative if it didn’t go as planned.
Variable Expenses that we will incur throughout the entire month are put in designated cash envelopes e.g. car gas, hair appointments, kiddos lessons, groceries, personal / fun money etc. This was a major step for us because normally within two weeks of getting paid, the Grace of God filled our gas tank 😅.
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