Budgeting
budgeting
Budgeting and learning to budget is a big building block to building a strong financial education foundation. In the posts below, we discuss budgeting in detail and even offer some examples to help inspire you to build your own budget. We are providing these in Excel and Google Sheets. However, if you prefer to use one of the applications online that automatically connect to your financial institution(s), feel free. The whole idea is to iron out the process and understand how a budget should work.
why is budgeting important?
Budgeting is important because it is us telling our money where to go, instead of allowing our money to dictate our lives. This is a process that enables us to take back control. It is so easy for money to drive us and our values, but we lose sight of the important things when we live like that. A proper budget and budget process gives us the ability to build a savings, pay off debt, take a vacation, or accomplish any other goals that you might set in your life.
how do we get started?
It starts with identifying high level categories for you to assign to your income. Think about this like a business would – you have your income lines that drill down into various income likes, such as W2 income, side hustle income, tax returns, etc. Then you have your total expense line that drills into you total house expense, total food expense, etc. These levels drill even further. It is important to get as granular as possible with your budget so that you are not vague with assigning categories or jobs to your money.
how often should we check in with our budget?
First, we develop our budgets at the end of the previous month or the beginning of the current month. This is a high-level expectation set during this time. Next, we check in with your budget as frequently as possible. It might be a good idea to start doing it weekly so that you can develop the habits and work on streamlining processes. After you get comfortable with your budget, check in with it as much as you think is best for you. Checking in with your budget allows you to fine tune it along the way – for example, if you expected to spend $50 on car repairs this month, but the bill came out to be $40, you have an extra $10 to re-assign somewhere else. Do not let it go unassigned.
Check out our blog posts about budgeting
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