How To Budget So You Can Save Time And Money
But, like most people, I hate budgeting. Yup, I said it.
1. having a clear image of your flow of income and expenses
2. tracking your finances to ensure responsible & efficient spending, and
3. living the lifestyle that you can afford to live
I mean, if you don’t know how much money you’re making versus how much money you’re spending, how can you make good decisions about where your money is being spent?
In most instances (nay, all instances), you can’t make educated decisions about your finances if you don’t have a clue what your finances even look like.
So, I always, always recommend that people find a budget system that works for them and to stick to it – even if they “make a lot of money.” No matter how little or how big your income is, you need a budget.
I mean, come on, nobody likes a money snob.
1. To track your flow of income & expenses and make responsible spending decisions
2. To pay down debt
3. To save for emergencies and retirement
Cause lets be honest here, if you don’t have a budget – or in other words, a strategy for where your income is being spent – how are you going to do any of the above three things?
If you don’t have a budget, you wouldn’t really know exactly how much money you make and spend each month – meaning you can’t really say that you spend your money in the most responsible and efficient way possible.
And, if you don’t have a budget, you probably don’t have a very good system in place to pay down your debt as quickly as possible in order to avoid interest costs.
And finally, if you don’t have a budget, I can say with a high amount of certainty that you probably don’t save as much money as you could be and should be saving each month.
So, you’re guilty of not having a budget system in place that works for you…it’s fine, it’s fine. We’re here to fix that for you.
We’re here to do it in the most efficient and stress-free way possible – by automating your budget with The Automated Budget System (TABS).
Huh? Yeah, yeah…stay with me.
Like I said, I hate budgeting…but like I also said, budgeting is essential – for everybody.
So, I took the lazy mans way out and I automated my budget, cause seriously, ain’t nobody got time for that.
TABS automates your budget by strategically setting up your finances to automatically deposit income in specified accounts and pay bills via automatic bill pay.
The reason I love this budget system so much is because it automates it. Don’t let me confuse you, I am not the genius who discovered that all your income should be used strategically. There are plenty of budget systems out there that use this exact method.
But, what they don’t help you do is to automate it.
Like the zero-based budget for instance. Same idea – use all your income strategically. BUT, you gotta take the time each month to set your budget up accordingly. You’re still having to actually physically budget your income each month.
Not with TABS. Welcome to the 21st century, peeps, there’s a way to make everything and anything easier nowadays.
So, grab copies of your four most recent paychecks and average your gross pay per paycheck. Then, multiply that number by four (or two if you’re paid bi-weekly) to get your average monthly income.
If you’re budgeting for your family, include all sources of income per month, such as your partner’s income, child support, side hustles, etc.
(Don’t have predictable income? Average out your income over the last 6 months and use that as an estimate. You’ll have to be a little more aware of your earnings each month to make sure you’ve budgeted your estimated income appropriately.)
Need help organizing your monthly income? Check out our Budget Boss Financial Planner to score an income and expense organizer and 90+ pages for tracking your budget.
When I’m budgeting, I like to make sure I can afford me and my families needs before our wants…as I’m sure most people do. Because of this, I like to organize my expenses into two categories:
1. Fixed Expenses
2. Variable Expenses
Fixed Expenses are expenses that you are required to pay monthly, such as rent/mortgage, utilities, cell phone, credit cards, insurance, etc.
Variable Expenses are expenses that vary in cost each month and could be decreased in cost if necessary. For example, things like groceries, gas, entertainment, clothing, etc.
Our Income vs. Expenses worksheet in the Budget Boss Binder is super clutch for organizing all this info!
Now that you have totals for your income and expenses, it’s easy to see if you’re in the green or in the red each month by subtracting your total income by your total expenses.
If the number is a positive number, ,you’re in the green and should be able to afford your lifestyle with ease each month.
If your number is a negative number, you’re in the red and will have to adjust your spending to afford your lifestyle.
In the red? It’s cool. But it’s time to say goodbye to some luxuries in your life.
Evaluate your expenses and get rid of anything that isn’t an absolute necessity until your expenses are less than your income.
For instance, my family cut out cable when things were tight. You could also trade in your car for a bike, spend less at restaurants, and take part in free activities instead of costly ones. If you’re not willing to cut back in expenses, think about getting a second job or starting a side hustle.
Contrary, if you’re in the green, the only thing you have to worry about is how you’re spending your extra income.
Are you paying down your debt to avoid interest charges? Are you saving for emergencies and retirement?
If you’re not, try automatically depositing a certain percentage of your income into a debt repayment account and a savings account each month.
I know, I know! Where’s this AUTOMATION that I’ve been bragging about?! Well, it’s finally here!
Your third and final step is to automate your budget using bank accounts, direct deposit, and automatic bill pay. Here’s how:
First things first, grab our Budget Boss Financial Planner and find your ‘bank accounts’ printable.
Next, list out all your bank accounts.
Then, assign each bank account with a percentage of income (that you can figure out with your income & expense worksheet).
For example, my families bank account percentages look a little like this:
- Fixed Expenses Account: 80% (I got this number by dividing my expenses by my income)
- Variable Expenses Account: 15% (This is the percentage of income we can afford for variable expenses based on our fixed expense account percentage)
- Debt Repayment Account: 5% (This is the percentage of debt repayment that we can afford after all other expenses)
We’ve opted out of saving money and having personal spending money for the moment in order to pay down our debt quicker.
Once you’ve assigned your bank accounts with income percentages, simply login to your works direct deposit and have them deposit the exact percentages into each account on payday.
Then, automate your bills with automatic bill pay to be withdrawn from your Fixed Expenses Account. Because you automatically deposit the exact amount of income that you’ll need each month into this account, you should never be short for bills.
Pretty sweet, right?