​Optimize Your Budget: How to Start a Budget

With my mind on my money and my money on my mind”. – Snoop Dogg
 
I couldn’t wait for my paycheck to come in so that I could swiftly tend to the balance. I was responsibly paying off everything that was due, but also, I needed a real picture of what my balance ACTUALLY was after paying things off. I felt frantic at times, I was constantly opening my accounts through the ever so easily accessible apps. I was obsessed.
 
The solution to my problem and my first step to take was to sit down and write up a budget. I had never learned how to make a budget, but an excel spreadsheet can make it easy to figure out. Budgets are like a road map that assign your money to a job.
 
So, I sat down, and I assigned my money to eight different categories:

• Housing
• Transportation
• Insurance
• Food
• Pets
• Entertainment
• Loans
• Savings/Investments

Each category will have sub-categories where I will list the item and the total spent on that sub-category. I create a total for each category to use in the equation that will determine if I am spending above or below my incoming money. In one corner of the spreadsheet, I put my total income after taxes, the total of my listed expenses, and then I subtract my expenses from my income to determine what I have left over.
 
I recommend tending to your budget on the last Friday of every month. It has worked well for me as a good cue to remember it. Every month that you work on your budget you can add more and more details. Eventually it will be a streamlined process and it won’t take much effort at all. This is a healthy habit that will help deal with some of the anxiety that comes with finances.
 
The first time you fill in your budget, make it easy on yourself. List the things that you can think of and the approximate value you think it is, creating a few sub-categories under each category. Done! You did your first budget. Give yourself a pat on the back!
 
The second month that you tend to your budget you will want to add more accurate numbers. Scroll through your bank account statements and take exact amounts to add to your budget. You can even use a separate spreadsheet tab to tally up the totals in your sub-categories. You will also want to create a new tab for each month to see your progress.
 
At first it was hard for me to admit some of my spending and list detailed sub-categories. There were things that were “wants” such as eating out, or clothing purchases that had way higher totals than I anticipated, or there were small purchases I just didn’t think of, getting a car wash, or buying cleaning supplies. Once I assigned some of these expenses into the appropriate sub-category, I started recording my spending under each one. I was better able to see what I was spending my money on and establish “needs” vs. “wants”.
 
Perhaps by the third or fourth month of tending to your budget, you can begin highlighting areas where you can make a reduction in your spending. This step allows you to set money aside for things, such as saving up for a new gadget instead of impulsively buying $300 headphones. It allows you to be mindful of your extra spending, and to be conscious of your debts and savings. For some of your essential services and essential costs, while it may seem like you can’t make any reductions, it never hurts to pick up the phone and ask them how you can save some money. In fact, this is something you should aim to do often! I called up my home insurance company and was able to save $500 a year because I had agreed to some terms that I really didn’t need. When talking to these services, ask about requesting certain payment dates, a date that will flow with your budget better. This is also a great way to make your budget more predictable.
 
Once you have a handle on what money is coming in and out of your account, you can start to tackle your debts and savings. What kind of debt and savings do you have going for yourself? Do you need to create an action plan? Do you need help from a professional to analyze your situation and get some advice? There is a correct sequence to paying off debts and many different ways to save or invest your money, so doing some of your own research would be very beneficial.
 
If you could use a basic budget spreadsheet to get started, please send “Budget” to rochelle@optimizewellnesssolutions.ca. Becoming aware of your budget and your spending can be freeing.
 
If you’ve always got money on the mind and it’s negatively affecting you, it is time to take charge and start making your budget work for you!

​Thanks for listening.
xo Coach Ro