Budgeting – Part 2 of 3 Begin to Decode Your Data

Written by Briana Cavanaugh

September 14, 2017

Why is it that so often when people hear the word budget word they automatically think it’s synonymous with restricting? I have a secret for you, amazing entrepreneurs. In reality, budgeting actually gives you freedom. Yep. You read that right. Freedom.

Business woman accountant shocked showing dollar signs on calculator. Surplus, debt or financial crisis concept image. Funny surprised young woman isolated on white background in high angle view.

Budgeting shouldn’t feel like squeezing into a pair of Spanx or eating ramen for dinner again. Having a budget should feel like knowing you can order that extra pink sparkly martini with dinner or take that art class you know would fill your soul with joy.

No, seriously.  You can have what you want. You might have to do some work to get there, but you were designed for pleasure. Your body, your limbic system was literally designed to feel good and so we want to leverage that here.

THe secret: Budgeting is just having a plan about what you’re spending.  The magic here is cutting through the obfuscation to the real deal.

Budgeting should feel like having a suitcase and carry on all ready for that magic vacation you want 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 (most likely with a sense of overwhelming dread) and thought, “Where the hell do I go from here?” this post is for you.

Here’s the recipe you can follow for a budget that feels like freedom and chocolate cake.

I have included a spreadsheet for you to use to really understand budgeting. It’s has a very comprehensive list of expenses. Annual Spending Plan – aka Budget

1. Write Down Your Fixed Expenses

Start by 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, so you can reference back with ease.

Make sure to get them all. Usually the is the bit people have the easiest time with becuase they are the same every month.

2. Go Through Your Variable Expenses.

Next, you’ll want to go over your bank 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, 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 were able to (mostly) skip this step!

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 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 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” money 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, “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.

In the next post we’ll go into more details about how to make changes if you don’t like what you see.

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.

Tell me, what’s your number one struggle when it comes to budgeting?


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