Month after month, do you find yourself looking at your bank account balance and wondering where all of your money went? Same.
It’s time we stop convincing ourselves that our paycheck just gets sucked into a giant black hole every month and start acknowledging that it’s – gulp — our fault for not keeping track of where the money goes. I’m 100% guilty of this.
But here’s the thing. We track our likes on Instagram and our calories (sometimes), so why not track our expenses and create an actual budget? It’s the magic that helps you have money left at the end of the month. Bonus: Only minimal skills required. And, we’ve found that creating a budget is fun because it can actually free you to … spend, because you’ll know how much money you have! See? A budget doesn’t have to be a four-letter word.
Figure Out Your Total Monthly Income
Write down every cent you take home (after tax) each month. If you receive a regular paycheck, this is easier for you because you can expect the same amount each month. Have a side gig selling amazing T’s on Etsy? Include an average of what that brings in, too. If you don’t have a regular income, take your last six months’ worth of income and average it. That’s the number you’ll work with.
Make a List of Your Monthly Expenses
Bills. Ugh. It may make your eyes burn to make a list of everything you spend money on each month, but believe me, it needs to be done if you want this exercise to work. Some of those numbers will be the same every month: rent, mortgage payments, car payments, insurance, student loans and you have to get in Netflix. Others, like groceries, utilities and Uber, will vary. If you’re cashless, you may be able to figure out what your average in these categories has been by looking back. If not, this is where tracking comes in. For the next month, write down everything you buy and what it costs. Four weeks from now you’ll have a good idea. (Or, if you’re like us and like instant gratification, take a look at your online banking accounts for last month to see what you spent money on for a quick idea.)
Quick tip: Don’t forget to budget for savings goals, too! Those count as expenses, because if we’re being the money mavens I know we can be, we should be automating something into our savings accounts each month.
Do the Math
There’s nothing more than addition and subtraction coming your way. Whip out your iPhone calculator and total your monthly income and monthly expenses, then subtract your expenses from your income. If your total income is a greater number than your expenses (and you factored in savings): Yay! That’s a great place to be. If it’s positive and you haven’t saved yet, you can take the difference between the two numbers and put that money toward your emergency fund, a vacation or even retirement! But if your expenses are greater than your income then you will need to …
Adjust, Adjust, Adjust
Ultimately, you want your income to be greater than your expenses — with a nice cushion for both savings and unexpected events. Because, life happens. If your numbers aren’t there, look back at where you’re spending and think about concessions: Could you eat out less? Watch a movie on Netflix instead of going out? Hit up fewer happy hours with the girls? Whatever it is, do a little less of it to make your budget work. That way, you can save a few bucks here and there, and that will bring you closer to your balancing your budget. (The other way to adjust is by working the income side of the equation, but that may be a little harder.)
Now that you are a budgeting queen, don’t forget to review your budget briefly each month and adjust accordingly. Maybe you moved and your rent went up, or you ditched your Spotify subscription and have a few extra dollars each month. Keeping tabs of these adjustments and altering your budget will help you stay on track — and be a budgeting master.
Money mavens, unite! We want to know how your budget works for you, and we want you to encourage us to stay on track with ours! Join the HerMoney Facebook group — a community of budget-conscious ladies with the gift of gab.