Let's talk money, honey.
I know you want to talk money!
And yes, I’m referring to those cringe-worthy words: SAVING and BUDGETING. Ugh, I know!
WAIT, DON’T STOP READING NOW! Ha ha.
Now, if you haven’t done so already, I strongly suggest you do Dave Ramsey’s “Financial Peace University” or FPU*. It’s seriously worth it. Truly!
Based on some of the many practical steps from FPU, here’s what I do every month (and no, I’m not telling you all of the steps from him – go on, do the course yourself):
1) Around the 23rd of each month, I set my monthly budget (or intended spending) for the following month. I use the website and app EveryDollar (which can copy over your budget from the month before to make things easier). Even when I’m in a different country, I just put in the amount that it would be in that currency (I convert it using xe.com) into my income amount. It shows how much you spend in each category too (with a cool color-coded pie chart!), so you can see when you’re overspending in certain areas (here’s looking at you, restaurants… or is it shopping for you?). Every cent it allocated (that doesn’t mean spend everything, it means that everything has a place – like savings) – hence the name EveryDollar.
2) I’m realistic about point 1. Why budget $45 on gas per month, when I usually fill up twice a month? That’s a silly example, I know, but you get my drift. I know that my food bill gets higher when my husband is not away for work (obviously), so I budget accordingly. Don’t set yourself up for failure before you even begin. We do not support self-sabotage!
3) Pay off debts first, snow-ball them (once one is paid off, use what would’ve been going to that debt to pay off the next one).
4) I save up for the inevitable. Guess what? Every month is someone’s birthday, and you know what? CHRISTMAS COMES EVERY YEAR!
Every month I budget for birthday presents, wedding gifts/baby showers, etc. If there isn’t one this month, there may be five next month (yes, that’s happened), so keep it going. And every month I put money aside for Christmas presents. I’ve gotten sneaky on this one, since I’ve decided that whatever is leftover in the Christmas fund after Christmastime, is what I get to spend on my daughter’s birthday party at the end of February (because that also seems to come around each year somehow).
5) Save for odd things. I get some awkward smiles when people realize I put money aside every month for a future car purchase, and for future travel plans that haven’t even been thought of yet (and for Christmas).
Put money into labeled envelopes for each category
6) Use envelopes or cash bags. “Whaaaat?!?!”, you say? Well, once I’ve established point 1 above, and my money has cleared into my account, I draw out all of my money to be spent that month. I then put the money in to various labeled envelopes. For example, I have envelopes labeled as “groceries”, “petrol”, “Hannah adventures”, etc. And then I have an important one: “buffer”. This is the equivalent of around $100. This is for when I come across something that was on my list but I don’t have the envelope for it with me (I don’t carry my entire month’s worth of cash with me at all times - come on). That way, I can still buy what I need, and then replenish it from the correct envelope afterwards. Dave Ramsey has nice envelopes too (complete with an envelope system carrier) where you can write down and balance what's left in that budget (look at you adulting so efficiently). His daughter also designed a budget-ready wallet if you're more keen on that option.
And then guess what? I can see exactly how much money I have left for the month. And when the envelope is empty… that’s it! I cannot overspend. If the money isn’t there, I cannot spend it (and if I’m desperate, I’d have to take it out of my clothes budget – which is not that much to begin with since I save for months to get just a couple things, so I’d better watch it and track through the month).
I like to label my envelopes so that they’re easy to see from above, and I keep them in a separate section in my handbag. My envelopes get re-used every month, so they are - um - "well-loved".
There are other options if you prefer not to draw all the cash at once:
If you’re disciplined enough, you can use the EveryDollar app, and every time you swipe your card, you go to that category in the app, and enter the amount you swiped for (or the paid version of the app will actually link to your bank account and enter it for you). And that way you can see what’s left in that virtual envelope.
There are many wallets made especially for this type of thing (see, it’s not that crazy).
So this is what I do in order to not get to the end of the month, and wonder “oh my, where did all my money go this month”, because I know exactly.
*Just a heads up (in case it’s something important to you): he does make references to the Bible and verses from it. If you have no religious affiliation (or one that does not include the Bible), then you may want to know about that. You are welcome to ignore the references he makes (he’s basically just saying, “yes, the Bible also says that being in debt is bad, and that having financial freedom is great, and giving to worthy causes is lovely” - he’s not trying to convert you). But his financial information is great, and practical, and definitely makes you feel in charge of your life, and making you feel like you are on your way to financial peace. This course is great whether you are bankrupt or a billionaire (or anywhere in between).