by Brenda Spagnola-Wilson
When I first moved out on my own, I had absolutely no idea what a budget was or how to use one. I had always had plenty of money to pay my bills, put a few dollars in savings and still had enough left to party on the weekends with my friends. All of that changed when I got my first apartment. Suddenly there were bills I'd never had before. After a few months I found myself with no savings left, drowning in debt and no idea how it had happened! Mom and Dad to the rescue! But not fiscally. What they did was show me how to set up an easy, no hassle way for me to budget and keep track of my money. It was so simple that I still use it, 20 years later.
We began, of course, by figuring out exactly how much I had coming in every month and what my regular expense were – rent, car, etc. Here's an example:
- Rent $500
- Car $225
- Electric $150
- Car insurance $55
TOTAL $930
Then we estimated my other expenses, something like this:
- Food $125
- Gas $75
- Credit Cards $150
- Clothing $100
- Entertainment $100
- Savings $100
TOTAL $650
$930 + $650 = $1580
Say I was bring home $1700 a month, then I would have had $120 left for emergencies, birthdays, etc. What I did with any extra was either put it in saving or in a special place where I could easily access it when I needed it.
Now, once I got my paycheck I would pay the regular bills first. These are things that MUST be paid regardless and should always be paid before anything else (the $930). Then I paid my other expenses (the $650). I wrote a check when I needed to, but I tried to pay as much by cash as I could. Here's why. I had an envelope for every single expense and put the appropriate amount of cash in it. Everything that had to be paid by check went into my checking account the next day, right after I mailed the bills off. All bills to be paid in cash, the money went into the envelope. If I knew I needed to stop for gas, I would take the "gas" envelope with me and pay in cash, keeping the receipt in the envelope. If I went to the grocery store, I took the envelope with me and put the receipt in the envelope when I was done. You get the picture. I kept ALL of my receipts, no matter what they were for. At the end of the month I was able to see exactly where my money had gone. And I found that I frequently had money left over in some categories. While it might have only been $2 or $3 dollars in change, this adds up quickly. This went into savings or set aside for whatever.
Using this system meant that I couldn't spend more than I had, which kept me from going over budget. And I admit that there were times I took from one envelope to cover expenses in another or buy something a little extra. But when the cash was gone, it was gone until the next month. I began leaving my credit cards at home and quickly learned to stay within my budget.
The next step in this process is paperwork. We all know what pain this can be, so we want to make it as simple as possible. Here's the easiest way I know. When you write a check, once it clears the bank and you have your statement/check proving it, toss the bill. The statement and check are all you need if there is a problem. For bills you pay in cash (like credit cards bills you take to the store), keep the receipt until you get the next bill showing your payment. Or get a money order and do the same thing. For everything else you paid cash, so no problems there. As you can see this really cuts down on the paperwork you have to keep. Which in turn means you don't need to find anywhere to file it. A small divided file will work and it is simple to find a place for something this small.
This system can easily be adapted as your needs, bills and budget grows. Plus, this is an easy way for teenagers and college age kids to learn to handle their money. There are tons of "budget systems" out there that you can buy. And if that's what is best for you then do it! But why waste your money? After all, this about not spending more money than you have. This system is easy. And for someone who isn't good with numbers, that's wonderful thing!
Brenda Spagnola-Wilson may be contacted at bspagnola@ev1.net.
Brenda Spagnola-Wilson is a SAHM who lives in Texas with her husband and two children. A published freelance writer, her topics most often focus on home improvement & decorating, living a frugal lifestyle, being a SAHM, general home care and day-to-day life. Currently she is a moderator and community leader at www.BabyUniversity.com and the Co-Editor of the At Home with Baby University Newsletter. Feel free to contact her at bspagnola@ev1.net with any comments, questions or suggestions.
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