Monday, January 23, 2012

Monday Momisms: Making a Budget


 One thing my upbringing severely lacked, besides structure and functional communication, was any type of domestic education. 
My dad was a mechanic so he did teach me things like how to check my tire pressure, change my oil and fix a flat, but he never went over things like organization, bill paying, grocery shopping or how to make a budget. 
All of that stuff I more or less figured out on my own when I moved out on my own. I will say Lainie and I ate a substantial amount of Cocoa Pebbles and frozen pizza in that first year on our own together.
My older sister tried to teach me some stuff, like how to cook a whole meal and the basics of a budget. But while her recipes are all ingrained in my memory forever, the budget thing took a lot of getting used to and some serious customization for my particular lifestyle and personality type. {read: spending habits and shopping addictions}

Now, I will say this: I don't like shopping. The crowds, the lines, the annoying sales girls always looking at me like I might steal shit, trying stuff on, keeping my kids from knocking everything over or getting kidnapped. Oy. I kind of hate it. And online shopping isn't much better because I think the shipping fees are way jacked up, and I don't like buying something unless I can look at it in person, hold it in my hands and see that it's what I want. Plus, I hate waiting for shit to get here.
I digress.
I don't like shopping, but I do like other things, such as having new shoes {if only they could just appear without the shopping part} and procrastinating, and using my debit card instead of cash.

All of those things combined eventually equals: me being out of touch with my money and spending habits, paying bills late, and eventually running out of money before my next check.
When you have two little kids who are walking pathogens and could need a trip to the doctor at any moment, or a car with four tires that could so easily go flat at any moment, and you're the ONLY one who can cover those expenses, running out of money is not an option.

So for those of you who are trying to create a budget, learn to budget or embrace living on a budget, here's how I do it. It might work for you, it might not, but I haven't overdrawn a bank account in 3 years since I made this budget if that tells you anything.

Step one: know how much your checks are going to be after taxes and deductions each month. Sounds simple, but do you really know how much a standard, 40 or 80 hour {depending how often you're paid} check is after everything is taken out? If you make $12.00 an hour, you may need to make a budget based on 10 or 11 dollars an hour depending what your actual take home is after tax and health insurance.
You can use this calculator to get an idea of what should be if you don't feel like looking at your bank statements, or you're about to start a new job.

Step two: add up what your total bills are for the month. That means knowing how much you spend on gas, groceries, electricity and any other variable expenses. Things like rent, internet and your car payment should be fixed expenses that are the same every month.

Step three: bust out a calendar and figure out when your pay days are and what bills need to come out of which checks. For example, your rent is due the 1st so that comes out of either your last check from last month or your first check of the new month depending on your pay periods, but will you get paid again before your phone bill comes due on the 15th? 
You need to know where each check is going.

Step three: Pay your bills FIRST. That means before you buy a single pair of jeans or eat a single meal from the drive thru, or whatever you use your spending money on, pay your bills, even if it means paying them early, and then stash 10% of your net pay for that check away for savings. It adds up quickly, and it's so little usually you hardly notice it. 

Step four: Pull out whatever you have left over after bills are paid and your 10% is contributed to savings, as cash. That way you'll be more in touch with your spending money, and you'll start to feel that pain when you hand over a whole five dollar bill for a cup of coffee and get no change back. It will make you start spending less, I promise you.

Step five: keep receipts for a month or two from the gas station and the grocery store so you can get a better idea of how those variable expenses are average month to month. Maybe you think 200 dollars is a good bi-weekly food budget, but if you look back at your receipts and find you're really spending closer to 400, it's either time to adjust the way you budget, or the way you shop.

There's something super satisfying to me about knowing all my bills are paid, my savings is hidden away, and the cash in my wallet is all mine to do whatever I want with. My spending money doesn't always last me until my next check, but I have savings set aside for emergency doctor's visits or flat tires, and my groceries and gas are budgeted out, with money set aside for them that's separate from my spending money.
I don't have any credit cards, and I support both my kids on one income, including a $750.00 a month daycare bill. I think a lot of that has to do with budgeting, saving, and sticking to it even when it means I can't buy any new Sharpies that month. 
And I really fucking love new Sharpies. 

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