Nette Life

Like most people, I don’t have a budget and I pretty much live paycheck to paycheck. Sometimes I stay within the limit of my income but there are also times (too often) when I do go over what I earn and have to either use credit or dip into savings (and there isn’t much there to dip either). So I know I have a problem and I know I have to solve it. It’s the getting started that is hard.

Today, while reading my feeds, The Simple Dollar has a great article on how to start a simple budget. I am seriously thinking of putting myself on a tighter budget. Because even though I’ve managed to increase my income, I haven’t increased my savings, only my expenses. I am still living paycheck to paycheck, fearing my money will run out before the next one arrives. I want to get out of that.

Here are some tips that Trent suggested to get started. I will start doing some of them ASAP. I get paid tomorrow, so I think it’s as good a time to start as any.

GET STARTED ON A SIMPLE BUDGET:
Trent suggests assessing your expenses first rather than immediately plugging in numbers into a budget form. I agree. Those pre-made budget forms never worked for me.
1. Track your Expenses, Save Receipts
Trent suggests saving all your receipts and noting every expense you make down to the penny for at least a month, three months would be better.
I just cleaned out my purse a couple of days ago and threw out a bunch of receipts. Starting today, I will start saving all my receipts and noting where I’m spending my money. The good thing is, I hardly ever carry cash anymore. I try to use my debit card whenever possible so I also have expenses recorded on my bank statements. Trent also says to use a notebook to note incidental expenses down to the penny. I have a notebook in my bag, I suppose I can use it for this
2. Sort Receipts and Categorize Expenses
After you’ve tracked all your expenses for a month or three, sort your receipts and categorize those expenses. Divide them up into required utilities (electric, gas, water, etc), non-required utilities (cable, internet, etc), groceries/food (include eating out and snacks in between), household supplies (paper goods, cleaning supplies, etc), car expenses (maintenance, insurance, cleaning), Gas (I put this separate from the car expenses because with the prices being they are, it deserves it’s own category, entertainment (movies, books, mini vacations, etc), and miscellaneous expenses.
3. Add Them Up and Decide
Once you have an overview of your spending habit, decide where you can cut expenses. You won’t be able to do much about fixed expenses like your mortgage, car payments and utilities, but you can probably cut something out of the other expenses.
For us, I can already tell you where a lot of extra expenses are going, and that’s food and books. The thing is, we’ve managed with less before so I am sure we can again. We just have to stop indulging ourselves so often.
4. Implement, Re-assess and Re-adjust
A budget, I’m slowly learning, is something that is constantly changing and evolving in order to work. It can’t be static or you are doomed for failure. Life is that way, in constant motion, so you have to be flexible and adjust to the situation.

Why are you doing this?
Another thing to consider when setting up a budget is your goal. Set a a purpose for trimming the fat from your budget so you won’t be tempted to dip into the money you’ve saved. (That’s me ) In my case, I really need to start padding not just our savings for emergencies but I also need to increase contributions to the kids’ education fund and our retirement fund. Oh, and maybe save up for a family vacation too.

Whatever your goal is in establishing a budget, whether for something sensible or fun, it just makes sense to be more conscious of how your spend. I’m trying to get out of mindlessness in my life. I am trying to be more purposeful in everything I do and be more determined. No more wishy-washyness.

So tomorrow, I start tracking my expenses. How about you, do you have a budget? How’s that going for you?