So, when trying to make due with what you’ve got, how do you even know what you’ve got?
Enter, THE BUDGET!
Yes, the idea of a budget may bring up some scary ideas or even make people cringe. But it’s actually liberating for me.
Why? Because I don’t have to worry about whether or not I can afford something or whether I am going to be able to pay for my groceries if I buy movie tickets or a new skirt. By knowing what I bring in each month and what I owe each month, I am free to choose how I spend and am confident that I will be able to be fiscally responsible.
There are many types of budgets that you can choose to use, but my preferred method is envelope budgeting. Envelope budgeting is a system where you allocate a certain amount of money to a category each month.
First, write down all your static monthly expenses such as rent/mortgage, utilities, cell phone bill, car payment, credit card payment, and so on. Then make a list of variable-cost categories such as groceries and miscellaneous spending money. Be sure to also include a category for savings so you will always have money set aside to go into your savings account each month.
I choose not to use cash and actual envelopes though. It is, after all, 2011 and I have my smartphone and checkcard with me all the time. So I use the Easy Envelope Budgeting Aid.
This is an amazing app that is available for iPhone and Android phones. It’s free (!) unless you want to get the upgraded version which has a fee. I have not found a need for the paid version personally but it’s there if you want it. This app is really useful because it has a corresponding website (www.eebacanhelp.com) which allows you to manage envelope categories, enter transactions, and add funds. You can do those things from the app too but I like the flexibility of using either, plus staring at my little phone screen for a while gives me a headache. Having an app allows you to enter transactions when you are out and about and I love that I can open the app before I walk into a store and know exactly how much money I have available to spend on groceries or shoes (you know, necessities). Plus, you can share the app with family members so your spouse is also in the know.
I started budgeting back in college (yes, I have been frugal all my life. Thanks Mom!) and started out with a envelope budgeting system using an excel spreadsheet which my sister made for me (gotta give credit where credit’s due). That works too since it operates off of the same basic principle. You enter your transactions into each envelope category and each transaction lowers the available amount for that category. Then you know how much you have spent in that category and how much you have left to spend.
So that’s what works for me! What budgeting methods work for you? Leave a comment below. I would love to hear your ideas!