Personal

Personal Budgeting Made Easy

by taylorbkeightley

First and foremost, Happy NEW YEAR!!  I hope you all had a great (and safe) New Years!

2020 is going to be very busy, but also so many things that I am looking forward to. We have five weddings (domestically and internationally), a couple trips to Europe, potentially buy a condo in San Diego, and potentially start a family (depending on timing of events).  Why am I telling you this? Well, since we have so much coming up, we have to make sure we have the finances to do so! Did you know that the average American has about $38,000 in debt, excluding home mortgages? And meanwhile, living in San Diego is not cheap either! So I am going to tell you what Bryan and I do to save money for all of life’s events as well as save for future events.

A little background, when Bryan and I first got married we kept our own accounts and we did not get a joint savings account until a little before our 2 year anniversary. And then after 2.5 years of marriage this month, we actually just combined our checking accounts.  We both still have personal checking accounts, but we have found it easier to keep track of everything we purchase on one account.

Starting October of last year, we completed Dave Ramsey’s Financial Peace University (FPU) course with our small group from our church. It was a 9 week course that walked us through the steps of how to get out of debt, stay on budget, and begin saving for retirement.  And before we started the course, I remembered my parents completing Dave Ramsey’s FPU before there was an app to help keep track of our finances. And full disclosure, we do not follow the course to a tee. We use it mostly as a resource versus a lifestyle as Dave Ramsey probably intended.

So what do we use to create our budget?  EVERY DOLLAR app! This has been our saving grace and the best thing is the app is FREE!  You can buy the Plus option, which I believe links your bank accounts so it automatically enters everything into the app for you rather than entering it manually.  But honestly, I would save the money and just enter it as you go.  This app has helped us rein in our spending.  When Bryan and I first got married, we used our credit cards to buy EVERYTHING! We always paid it off at the end of the month, and sometimes we would go into savings to pay it off at the end of the month, but we figured if we paid it off there was no harm right?  Well, in the FPU course we learned that people who make purchases with credit cards were 40% more likely to spend more money.  OUCH! Now, we use our debit card attached to our checking account and enter the amount spent in the appropriate budget spot. I love that we are able to see how much money is budgeted into that category, because if we don’t have the money, then we don’t spend it.  It simply keeps us on track. And if we have any money left over at the end of the month, then we put it towards the debt we have to pay off debt faster.

Where do I even begin? When you have a couple hours, sit down with your bank statements and add up your average monthly income and then add up your average spending per month. Then also make a list of all your debt including the interest rates, balances, and due dates. Then start making categories and within each category place subcategories. For example, we have a category called, “Giving” and within that category we list all the organizations we give to monthly and the date that it is taken out of our account or is due. Other categories may include savings (different savings accounts), housing (all housing bills), transportation (gas, insurance, etc.), food (groceries, restaurants), and personal (clothing, nails, gym, etc.). Another category we have is labeled ‘miscellaneous.’  This is an important category to include (if possible) because things are destined to come up during the month that you did not plan for. For instance, you did not add your oil change that is due for your car into your transportation budget but you know it needs to be done.  You could use your miscellaneous budget (if possible) to help cover that expense so you do not go into your savings.  One nice thing about the Every Dollar is that it comes pre-loaded with categories that you may forget about. And if you need to add more it is easy to do so too, or if a category doesn’t apply to you either, you can delete it! This app is really easy to use and very customizable.

This is an example of what a budget looks like on Everydollar

If you don’t know where to start, there is another rule called 50/30/20.  50% of your income goes to needs such as groceries, housing, bills, etc. 30% goes to wants which includes shopping, restaurants, gym membership. This category would also include saving for a vacation or car too. The remaining 20% goes to savings like retirement, paying off debt, or emergency savings. We have not followed this rule, but I am sure it is just as helpful.  Here is what our course taught us when you break down your income.

Now, the first few months of budgeting can be a little difficult only because you are estimating how much you need in each category/subcategory. So whatever you do, stay with it and adjust them appropriately. It will eventually start working.  The other nice thing about using Every Dollar is that you are able to copy over your budget to the next month and adjust appropriately so you don’t have to spend multiple hours again doing it.

If you are unmarried, it can be very helpful to get an accountability partner to keep you on budget. Find a friend or a family member to help keep you on track. For some people carrying cash in envelopes is better because it is more of a physical act of paying versus just paying with a plastic debit card. Now, some people have asked, “can I just use a credit card and stick to my budget?” But when it comes down to it, it becomes more of a mental game because you actually see your bank account draining.  Trust me.  Bryan and I tried this too. We wanted the best of both worlds; we wanted to stay on budget and to earn points with our credit cards as well as keep an amazing credit score. But by using our credit card all the time we ended up spending a lot more money. Since changing to using debit card or cash we have a lot more money left over at the end of the month that goes to savings or paying off debt.

Now, go start paying off your debt and save more money!  I hope this was helpful for you guys!  if you have any questions, please don’t hesitate to reach out! I would love to help! 🙂

xoxo,

T