All about BUDGETING
January is over people! and with that comes the topic of today, Budgeting. It took me forever to write about this because let’s be honest, budgeting is fucking boring. But it is something so important if we want to improve our finances that we just have to do it. I have been budgeting on and off for the past couple years but oftentimes I procrastinate. The reason I resist to review my expenses at the end of the month is because most likely they exceeded my income. I’m sure I’m not the only one here when everything is so expensive.
I have tried countless budgeting excel formats to make it more fun, but nothing made it more exciting. This year I didn’t have a choice but to stick to our budget as a family of four. I felt like we did so much better financially than when we were making double the income. We learn to manage our money better and to really prioritize our expenses.
I recently saw a video that shared a format and will be using it this year. I think will make it more fun. Unfortunately, I cannot share the excel format because this website doesn’t let me share excel tables but if you are interested, send me a message and I will email it to you.
So how I will be budgeting this year?. There is a general rule in the world of budgeting, the 3 F’s and that is the 50%, 30%, 20% rule. Which means that 50% of your total income should go to the Fundamentals, 30% should be on the Fun bucket and 20% should go to the Future you. Here is how we will be categorizing our expenses this year:
First, I calculate what we make every month, that is all money coming in. Then calculate the total in each category to come up with the %. With excel you just plug the numbers and there is a formula that calculates it for you.
FUNDAMENTALS: These are expenses that are non-negotiable.
Mortgage
Car and Train Expenses
Phone
Insurance
Groceries
Utilities
FUN: These are the expenses that makes life fun and worth living for.
Meals out
Museums, Parks
Clothing
Donations
Coffee
Self-Care
Gifts
Subscriptions (Disney, Netflix)
Amazon Prime
FUTURE YOU: These are expenses for the life you envision down the road.
Emergency Fund
Extra Debt Payment
Self-development
Education
Vacation Fund
Investment Fund
529 Plans
I encourage you to sit down in the next couple days and go over January expenses and reflect on it, that way you set a foundation for the entire year. Remember there is a no judgement zone here. Our goal is to improve our finances one day at the time, end of the story. There is no point of setting big goals if we don’t get our hands dirty and get thru this process. Budgeting is like going to the gym, we resist to it but once the workout is done, we feel good about it.
See you soon!
