First of all, I have to just say thank you if you’re still here with me at FGF! 😊 I was so hesitant to venture into the blogosphere, but the hope that I’m helping someone out there get their financial crap together gives me motivation to keep going.
I was talking to some friends of mine about where to head with this next post and honestly this might be my least favorite post yet. (Yes, I know it’s only post #4.)
Y’all. Budgeting is the worst. Actually, no, it’s not. I just love the idea of budgets. Neat little spreadsheets and an easy to follow plan, but it’s not like making biscuits and gravy. If you’ve done any reading about finances on the internet I’m sure you’ve seen at least 8-10 different ways to budget. My own personal preference is the 50-30-20 budget, which is what we’ll be yakking about today, but I only decided on this approach after several years of trial and error.
Note: 50-30-20 is not perfect for everyone! I highly recommend that before you commit to a certain style of budgeting you try it out for 30 days and if you’ve got a sweetheart with whom you share finances, make sure they’re on board! ❤
As far as I’m concerned, budgeting it just like following a recipe- make sure you’ve got all the ingredients in their correct quantities, follow the instructions and BOOM! It’s an instant success. TBH, my secret ingredient for the BEST sausage gravy? Cream Cheese. 😊
- The Numbers- your monthly income, your fixed expenses (rent, utilities, debt repayment, car payment, rough idea of what you’re spending on groceries/gas/other variable, but consistent expenses) 50%, variable expenses (i.e. eating out, entertainment, the like) 30%, and of course, WHAT YOU’RE SAVING, INVESTING OR PUTTING TOWARDS RETIREMENT 20%. Because you ARE doing that, RIGHT? 😉
- Your preferred method of calculation and writing (smartphone is the tool of choice for me, but a laptop, tablet or a calculator/pen/paper is fine too!)
- Optional: a specific goal for your budget, i.e. ‘reduce spending on fast food’ or ‘save up enough to go to Costa Rica’. Like I said, sticking to a budget can be rough, but having a specific goal in mind can give you a little extra motivation!
- Browning up your pork sausage- and y’all BETTER be using Jimmy Dean! (Add up those numbers we were talking about and figure out your MONTHLY income)
-If you’re paid bi-weekly or weekly, use this formula: (PAYCHECK x 26/52 [weeks you receive a paycheck, 26 if bi-weekly, 52 if weekly])/ 12= average monthly income.
-Total your fixed/variable expenses and savings contributions. If you’re not sure how much you’re spending on things like gas or groceries, pull out bank statements or log in to your online banking and take an average of those purchases over the last 30 days.
2. Form a roux, then add your milk, sausage, and cream cheese (Time to check your percentages!)
– Remember: What you’re hoping to see is 50% of your income towards fixed expenses, 30% towards variable expenses, and 20% into savings, investments and/or retirement funds.
-Don’t feel bad if your numbers are nowhere NEAR where they need to be- that’s why you’re here with me, isn’t that right?
3. Salt and pepper to taste (Making adjustments to your current spending/expenses)
-This is where tracking your spending is super helpful! (The online banking through my financial includes tracking/categorizing purchases, but Mint is a great app for this also.) For instance, if you realize that the amount you’re spending on fast food (ahem *looks guiltily in the mirror*) takes your variable expenses from 30% to 40%, it’s easy to see how you can adjust your budget to make more room for saving for retirement or building up an emergency fund.
Here’s an example budget I drew up to show you how the 50-30-20 system looks in black and white:
Just like making biscuits and gravy, you get better at managing your money over time. Now y’all hear me out- nobody is perfect. Especially not me! Sticking to a budget isn’t easy and slip-ups are going to happen- that’s how we learn! Or anyway, that’s how I’ve learned. I like tracking my spending and putting together a budget at least once a year because it forces me to take a long, hard look at where my money is going and how I can manage it better.
Bless your heart if you made it to the end of this post- lord knows it was a long one! ❤
P.S. I couldn’t talk about biscuits and gravy that much without passing on my favorite sausage gravy recipe! 🙂