How To Budget And Personal Finance Basics
I used to sit with my dad as he combed through the finances, his brows furrowed in concentration. Little did I know that on those mornings I was subconsciously learning how to budget and personal finance basics. They say we learn everything from our parents.
He’d sit on a stool at our open kitchen and just devour the information over a cup of joe. I was curious. Why did he devote all this time to his spreadsheet? Was this a work project?
He went over how he calculated all the household expenses and income and balance it all. He kept tabs on check balances and even his car depreciation.
It kind of went over my head. I was busy just trying to figure out what I wanted for breakfast or how to laze around for the day. I honestly spent a majority of my 20s not knowing much about my finances or how much I made. I always worked during college and had a plethora of jobs after. I could afford the things and experiences I wanted, but I didn’t really know how much was being spent; how much was wasted or saved. To this day I wonder how much I could have been saving during this time.
The first time I had to budget I just made a list of the income and combed through every single expenditure that I made. Then at the end, I subtracted the expenses from the income. Every coffee I bought, every lunch I ate out, and every trip to Target I took was recorded. It hurt. I literally cringed when I realized how much was being wasted.
I mean, did I really spend $50 on coffee this month??
And what was that subscription on my card? They’ve been charging me for over a year!
I realized I could be saving thousands a year and making more out of my money if I accounted for it all and held myself responsible on how it was spent. However, I realized this wayyy too late in the game; the money was already spent. I felt really bad after realizing how much was wasted. Part of me didn’t want to keep going and budgeting, that’s how bad I felt.
Now It’s been 4 years of budgeting. 3 years. I keep it all on a spreadsheet. Google Spreadsheets :). I can track how much my income has increased in those 3 years. I can track how much my overall spending has been by category. I can brainstorm on ways to cut costs or increase income. I can make long term goals like paying off all my debt and estimate the last payment date.
Omg I love spreadsheets!
And I don’t spend hours upon hours on it. I pretty much spend a half hour tracking my spending twice a month. Once in the middle and again at the end. Literally ONE HOUR a month. I recommend setting mid month goals and then reassessing for the latter part of the month if your unclear or are unable to meet your goals.
Below is a simple sample of what you can do.
Take home Salary $2500
Misc (shopping/medical related costs/eating out) $-600
Credit card payments $-100
Student loans $-150
Total expenditures= $-2170
Tip: Put your savings towards credit card debts and student loans to make the payoff date faster. Or save part of it for an unexpected expense.
I wouldn’t say budgeting will fix any money problems overnight but it will definitely give you a sense of control over your finances, plan for a rainy day and create a long term plan with goals. But personal finance and gaining control of your spending/earning is the first step.
Update: I have saved sooo much money this way, literally thousands of dollars. It’s a very simple strategy but it 100% works. It’s all about motivation, perseverance and keep up with the tracking.
Feel free to comment below on your goals or feedback on your budget!
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