Part II: Turn Tracking Into Data
This is part 2 of a 3 part series. The first part is about tracking your money http://blissyourmoney.com/budget-101-series/. Make sure you grab that one before you do this one!
Why is it that so often when people hear that word BUDGET they automatically think it’s synonymous with restricting? It’s like budget = diet. (And diet is just die with a ‘t’ on the end. I won’t go into details about why dieting actually causes the very things that people think they want to get away from, nor will I talk in detail about body acceptance and how anti-fatphobia we are here, but rest assured I’m here with love to stop the self-hate. I promise.)
I have a secret for you, amazing entrepreneurs. In reality, budgeting actually gives you freedom. Yep. You read that right. Freedom.
Budgeting shouldn’t feel like squeezing into a pair of Spanx or eating only salad for dinner again. Having a budget should feel grounding. Like knowing you can order that extra pink sparkly martini with dinner, buy that hot red dress, or take that art class you know would fill your soul with joy.
No, seriously. You can have what you want.
The whole point of transforming your relationship with money is so that you can have what you really, truly want.
Why? Because your desire is actually your deepest, most honest compass. Your desire is what has you feel alive, connected and fully expressed. I want that for you.
Desire also needs some rails – some boundaries. It needs places that it can be active and places to rest.
So the secret to budgeting? Budgeting is just having a plan about what you’re spending. It’s about giving yourself rails/boundaries in some places and spaciousness in other places.
Budgeting should feel like having a well packed suitcase all ready for that magic vacation you’re aching to go on. The all-inclusive one that’s already paid for where you know that you can seriously chill out because there really is nothing to worry about.
If it’s been a hot minute (AKA probably a month or more) since you’ve sat down to check-in with your bank account or if you’ve looked at your account with a sense of overwhelming dread, and thought, “Where the hell do I go from here?” this post is for you. Budgeting if for you.
It’s to help you feel like you can make progress towards your desire.
Here’s the recipe you can follow for a budget that feels like freedom and chocolate cake.
Write Down Your Fixed Expenses
Start by grabbing your last bank and credit card statements and writing the things you absolutely, 100% have to spend money on. Things to include in this section include things like: your rent or mortgage, car payments, insurance, that hospital bill from the time you broke your leg, your phone bill, and so on.
Write these clearly at the top of your page, or in an Excel doc preferably (Google Sheets anyone?), so you can reference back with ease and consistency.
Make sure to get them all. Usually this is the bit people have the easiest time with because they are the same, or roughly the same every month.
Go Through Your Variable Expenses.
Next, you’ll want to go over your bank and credit card statements from the past few months. As you do this, add up how much you’ve typically been spending monthly on things like: food, entertainment, your gym membership, that carwash club, haircuts, gasoline, eating out, travel, workshops, child care, house cleaning, bodywork, coffee, books, nights out, clothes, household stuff, sex toys, etc.
Write these down below your non negotiables.
If you’ve been using something like the Mint app (you can see other budgeting apps we recommend, here) they may already be sorted into categories. Congratulations– you might able to (mostly) skip this step if you’ve been tracking already!
If you’re not tracking your money, you must track your money before you can make a budget.
You have to have information, in order to make your plan. You wouldn’t try to get to a restaurant before you knew what city it was in. So get yourself on the map by doing some tracking. If you’ve done tracking before awesome – use that system.
If you haven’t tracked your money or you don’t have up to date information, go back to that first post about tracking and do it up. There really isn’t another way to do this an be accurate.
And that lack of accuracy is often the biggest fly in the ointment. If you want to move forward with clarity and confidence, you have to have good data to go into your plan.
Otherwise you might find yourself trying to find that tasty sounding restaurant in Indiana when it’s really in LA and end up awfully hungry. Get accurate info before you try to plan and I promise you it will be a lot easier.
Why am I belabouring the point?
Because looking directly at your money is THE primary cause of my client’s financial woes. They don’t look often enough or thoroughly enough at the information they have and then they don’t use it make decisions.
I want you to be successful. And to do that you have to follow a proven plan. If you follow the steps, I promise you’ll get there!
Evaluate The Money Leftover (it’s ok if the idea of “left over” makes you laugh)
Add everything up (take the average from the past 3 month of non-negotiable expenses) and ask yourself: “Do I have enough money leftover to live without stress? Do I have money to put the amount into savings I’d like to be? Could I be possibly not be trimming corners as much and actually going out with my friends/significant other/selfcare dates more?”
If the answer is yes, fabulous I’m happy for you! The next step is to give yourself a pat on the back, deciding where you’d like to allocate this money.I recommend savings along with a treat now and again. And then putting that plan into action.
If the answer is no – don’t hit the panic button yet! You’re in the majority.
The answer for most people reading this blog is no, there’s nothing or less than nothing left over! The people who have money left over are probably not reading about how to budget.
So let’s do some evaluating of what’s going on.
What categories did you end up spending much more than you had thought in? Ask yourself some of the following questions:
How much do I have to cut back to live comfortably?
Where I am most definitely living beyond my means?
What do my numbers have to begin looking like so I can be putting aside into savings? and then use that to create your monthly budget.
And this is the big one: How can I make more money?
This last one is the primary reason my clients start working with me. They realize that they need to make more money. The truth is that often they don’t even realize that they’re under earning until they take a look at the numbers.
And then, BLAM-O! It wallops them upside the head.
This is actually a good thing! This means that you’re looking at the issue and now you can begin to take action and make change! This is EXCELLENT news! (Even though it might seems awfully hard.)
Creating a budget can seem scary, but when done correctly (and maybe alongside your favorite sweet treat or a glass of red!) it most definitely doesn’t have to be. It can be liberating to realize that there’s nothing wrong with you. That actually you need a new tool or some support – and we’re here to support you. Please do reach out if you’d like to take a deeper dive!
Tell me, what’s your number one struggle when it comes to budgeting?