Creating A Budget Part 1: Why A Budget & Where Do I Start?

It’s January, the time of year when many of us sit down and plan out the upcoming year.  It seems every year the major areas of improvement that people want to work on are losing weight and saving money.  For many of you digging out of debt, getting your finances together, and saving for a big goal may be on your list.  Today we are going to discuss how to get there, and that is with a budget!

When I had my first child, almost 11 years ago, I knew that if I ever wanted to be a stay at home mom with her, I was going to have to learn to tell my money what to do instead of wondering what happened to it at the end of the month.  I needed to be the boss of my money instead of it being the boss of me.  I didn’t have a lot of background in money management.  I had taken a class in college that honestly didn’t have anything to do with everyday life and accounting when I was a freshman in high school 8 years prior.  I knew that I if I was ever going to make my goal, I would have to learn how to manage my money which meant I would need a budget.

I’m the first person to tell you that when I used to think of budgets I had mental images of restrictions, rules, eating food that I hated and other bad images associated with it.  There is no need to have bad images associated with budgeting.  People that take the time to discipline themselves with the word “budget” should associate it with the mental image of what their goal is whether it is being debt-free, buying a car with cash, or whatever their goal is.  That is why they created one in the first place.

Yes, there is discipline involved but if you can discipline yourself, you will reap the benefits.  Yes, I did have to quit spending all of my extra money on clothes for my darling little girl.  Yes, I couldn’t eat out as much as I maybe wanted to.  Yes, I did have to tell myself “NO” when I saw things at the mall that I wanted but I knew that I couldn’t afford.  Yes, I did have to sit down for an hour and figure out what our bills were each month and what our income was (and after the first few months of tweaking the budget I could do a month in less than 15 minutes).  However, because of the discipline, I started seeing my savings grow, debt go down, and eventually I was able to stay home.  I’m not going to lie, because of bad past decisions, it took me until right after I had the twins to get there (almost 5 years later)!

Going into debt is a lot easier than digging yourself out of it.  It’s fun to swipe the card and carry home a bag of new things.  It’s nice to have a closet full of fun clothes, a shelf of great new books to read, new cars, and other wants.  It’s not fun to get the credit card bill and see how much you owe and know that there is no way you will be able to pay it off this month, next month, or even in 6 months.  

One of the best lessons I’ve learned in adulthood is how to be in control of my money.  I’m not perfect, I do buy things I probably shouldn’t at times, we eat out a lot, and I love a new pair of boots!  However, I no longer do it without the cash in my account.  If I don’t have the cash, it doesn’t happen.  If I want it that bad, it can wait and I will still enjoy it 3 months from now just as much as I would today.  (Disclaimer: I am not a financial expert here, nor do I proclaim to be, but I do hope that this small series on budgeting can help you out!)

The first thing I did when I was trying to get my money in line was that I started listening to Dave Ramsey.  I’ve always been a learner and I when I find a topic that interests me, I go crazy trying to learn everything I can about it.  I read his books, listened to his radio show, and visited his website frequently.  I checked out other books from the library on saving money, learning how to reduce bills and started meal planning.  Dave’s plan made sense to me, so that is what I went with.  Dave kept preaching about making a budget, sticking to the budget and start paying down your debt with the debt snowball.  (We will get into more about all of this in the next few days!)

Many of us get overwhelmed with just the thought of creating a budget so we are going to do this over a few days to lessen the stress.

For today, you need to do is to gather your financial information.  If you bank online or get paper statements, gather them up!  In the next few days we will be looking at this information to figure out your income and expenses so you can create your own individual budget.

I hope you’ll join me back here tomorrow morning for the next step!