Budgeting 101

So let’s talk about money. Yeah I know it’s not a fun topic and some of you maybe even ended up hyperventilating a little reading that thinking “oh crap...did I pay my car bill this month?” (Also I had to check two days ago because I had the same hyperventilation going on.)

Annnyyyway…

I had my first experience with budgeting and managing money when I convinced my mom that I could buy a car when I was 19. I had just finished my freshmen year of college and I wanted to buy my own car. I can’t for the life of me tell you why I wanted to buy said car...it was most likely because I wanted to be able to more readily see my then boyfriend (insert eye roll at younger Abby here).

So the dad of my then boyfriend had a connection to some car dealerships and he offered to help find a used car for me. My mom was not about it. She thought it was silly for me to buy a car and thinking about it now, she was probably right.

I had some money saved up and determined that I could comfortably buy an under $7000 used car with my savings and job at my college library. In order to convince my mother, I made my very first budget spreadsheet. I showed it to my mom and she begrudgingly agreed that the numbers looked good (Numbers don’t lie folks). So with her blessing and her generous offer to cosign the loan, I bought the car.

I didn’t pick up serious budgeting again until junior year of college. I needed a way to manage my cash flow and what I was spending so I put it all in a spreadsheet. Over time that spreadsheet developed into a month by month breakdown. More often than not I was just barely hanging on to a positive balance in that checking account, but I did it.

After I graduated and got a new job, the budgeting took a serious turn. I tracked everything. I kept track of how much I spent on each card. I itemized the purchases. I made sure I could pay rent and utilities. I had it down.

Seeing all my purchases and expenses laid out in front of me actually made me feel in control. I knew everything. I knew what I was spending and where I was spending it. I knew the balance on every account and I felt comfortable knowing that I could see that financial path ahead each month.

After a brief jaunt down the all cash budget road, I decided that it wasn’t for me and wanted something different. So I came up with a real budget with percentages of income and stuff last summer. I knew I was overspending my hypothetical budgets and wanted to feel more in control. So I decided on the 50-30-20 breakdown. 50% of my income when towards essentials: car payment, insurance, phone bill, rent, utilities, gym membership. 30% when towards groceries and non-essentials: clothes, dinners out, drinks. Finally, I tried to make sure I was saving at least 20%. I divided those savings among my rainy day fund and travel fund.

It made me feel so. much. better.

I still tracked everything and divided things up by account. So my checking, savings, Amazon credit card, Discover credit card, and Venture one credit card all have separate rows in my budget spreadsheet. There I keep track of each purchase on each account. That helps me see where my money goes and ensures I never miss a payment.

Then I created a separate budget spreadsheet where I broke down essentials, non-essentials, groceries, and savings. I input all of my purchases in that spreadsheet as well, but instead of dividing them by account, I divide them via budget area.

So for instance, I put every grocery purchase in the grocery columns and keep a running “amount left” in the last column. That way I know how much I have left to spend each month per each budget.

Due to the fact that I wanted a little more financial security, I started working the freelancing hustle hard. I have a few regular clients and also pick up piecemeal jobs frequently. This gives me the freedom to maybe buy that pair of shoes that’s not in my budget this month. It also lets me save more comfortably and have a little checking account cushion.

Now I know that everyone deals with their money differently. Some people hate looking at their finances and set up automatic payment in full for everything. They feel better not seeing every transaction. Personally, I hate not knowing. I want to know exactly how much I have in every account at each given moment. It makes me feel more in control.

Honestly, I encourage everyone to get a budget together. If for no other reason to have the peace of mind knowing that rent won’t bankrupt you this month and to stop you from feeling guilty about getting brunch every once in awhile. My budget has saved my butt more than once and it helps me continuously work toward some savings goals I have. So maybe take a look at your bank account after pay day, getting things in order could make a big difference.