It’s the end of the month. You have worked very hard to earn as much money as you could. You’re feeling pretty good about being able to save money for your next life goal. But as soon as you check your bank account, you realize something terrible….your hard-earned money is gone! Where did it go? Who took it? How can this be happening?! These days it seems as if more and more individuals are working two jobs just to make ends meet. For many people, their answer to the ‘not enough money’ problem is to make more money-makes sense, right? What if I told you that more money may not solve the problem? Would you think I was crazy? The cycle goes something like this:
Not enough money -> 2nd job -> Spend more because I am earning more (& I am exhausted) -> Still not enough money ->
There is another solution I would like to share with you. It’s called a budget. First, what is a budget anyway? A budget is a tool to tell your money where to go. It also measures your income vs. spending and can be used to aid in saving money to reach a specific goal. For example, if you want to save money to build a house, retire, pay off debt, or quit work to become a stay at home mom, you will need to spend less money than you earn. Everyone understands this, but applying it can be challenging. Where do you begin?
The first step is tracking your spending. If you don’t know where your money went or even how much you spent last month, you need to begin by evaluating where each dollar goes. We track ours down to the penny. Yes, this can be eye-opening and even shameful, but it’s an important step in the process of creating a budget. Please don’t try to just make up random numbers for each category and then wonder why you can’t stick with it! You need to see what you are spending now in order to find areas where you can cut back . When you track your spending for at least a month (although it may take 2 or 3), you will finally be able to see where all that money went. No one took it after all. You spent each dollar on something….and now you know exactly what it was.
There are many different ways to track your spending. You can choose the one that works best for you.
Phone apps: There are plenty of options, but here are a couple of our favorites.
- Budget Envelopes~ You can create categories depending on your needs. Once you have tracked and are ready to set your amount for each category, it will show you how much is left and if you went over budget. You can also add in your income and easily compare your earning/spending. ***EDIT: We left Iphone and now use Goodbudget since Budget Envelopes in not available on an android device.***
- EveryDollar Easy Budgeting App~This app is user friendly and a great tool to keep track of spending. It gives you common categories and expenses but does allow you to add items depending on your needs. It shows what was planned, how much has been spend and how much is remaining for each month.
Save all receipts: If you prefer, you can keep track of everything using receipts, a calculator and a spreadsheet. This works well unless you do mostly online shopping and don’t get actual receipts. As long as you write down each expense, that is what matters. You can create a category sheet and keep track of each expense as it comes. As soon as I pay a bill or get back from a shopping trip, I am quick to note all of my spending so I don’t forget. Download our FREE ExpenseTracker to begin tracking your expenses!
Once you have tracked your spending, make sure you aren’t missing anything you didn’t pay that month. For example, maybe you only pay your property taxes twice a year. Be sure to calculate a monthly cost by dividing this bill by 6. This way you won’t be surprised when that large bill comes because you have already planned to spend that money! If you have done your best to include everything you spend money on (whether a necessity or not), you should have a fairly accurate idea of how much money you need to earn each month in order to cover your expenses. From here, you can decide whether to cut your costs or add income in order to meet your financial goals.
Having a budget has helped us tackle some huge financial goals! When we moved into our house, we set a goal to have it completely paid off in four years. This was an ambitious goal, but thanks to our budget, after two years we are still on track! We will be relieved to have zero debt and be able to focus on our other goals in only two more years.
Your budget will change as you pay off debt, add children into your family, etc. It is good to reevaluate your income and spending once a year. Some experts even suggest tweaking your budget monthly so you know exactly what you will be spending money on when each month begins. My husband and I don’t budget with a goal of becoming wealthy. We are called to be wise in how we use our money, along with every other area of our lives. God is allowing us to earn it, but it isn’t ours to do with what we want. We would love to be debt free, continue to live on a minimal income and be able to give generously as God shows us where there are needs we can meet.
How about you? What are your financial goals? Track your spending and get started with a budget today! Be a good steward of each dollar.
Seeking Wisdom,
