New Starts & My Budgeting Process
March 2, 2017
So, we’re one day into a new month. I love new months. It’s the time when a fresh new YNAB screen loads and I get to decide anew what to do with my monies that month. This particular calendar roll-over was exciting for two big reasons:
- We are now in the month that contains the official start of Spring. Don’t know about you, but I have a serious case of Spring Fever. Seeing the sun and blue sky uncompromised by the inversion and winter haze that Salt Lake is glorious. I feel on the inside like my college roommate’s iguana, Pickles, looked on the outside while basking on his rock in the light and warmth of a heat lamp…super content.
- It was the first paycheck that had not a single speck of money going to debt. All of that money is for my current and future, NOT purchases and decisions in the past. It was accompanied by such a surreal feeling but one I will deeeffffinitely get used to:) While I am over-the-moon excited about it and proud of myself, I don’t want to belabor this point because it’s not the end of my journey, rather, hopefully it is the continued beginning of helping you do the same. More on this to come in the next, oh, 40 years of my writing:) In short, here’s what I’ll keep preaching.
Anywho, so here we are on March 2 with many of us having new money to distribute. In case you haven’t gotten to yours, I thought I’d share my step-by-step. This is a sacred ritual I seriously look forward to so much that I will wake up early/lose sleep/skip breakfast to make it happen. Yes, I love it.
- Make sure my accounts in my budgeting tool (helloooooo YNAB!) are reconciled with my checking account and cash inventory, etc. This way I know for sure I am safe to budget all the “Available To Budget” money. Everyone’s bank is different so you have to figure out which number from your bank account to use but basically, you want to know if every transaction that has actually been spent (Checking account, credit card statement) is logged in your budgeting tool and categorized appropriately. It’s the pits to think you have lots of dollars to spend, only to realize you forgot to enter an unexpected, large purchase. Those of you who use the bank-sync feature should always match but for people like me who choose to manually enter my purchases, reconciling before distributing a new paycheck is essential. You’ll get good at it and this takes all of about 5 minutes.
- Pull out my handy-dandy master sheet on which I have my amounts for each category. I know, I know. YNAB, and tools like it I imagine, allows you to declare a Monthly Funding Goal for each category. That’s awesome and maybe one day I’ll take advantage of it but for now, this is working for me and I like the connection with my scribbles and arrows and updated amounts, etc. Armed with this, now comes the fun part of moving money. 0.1 minutes.
- I first fund (AKA: move money from my Available To Budget stack of money to) the non-negotiables: Tithes and Bills (utilities, insurance, rent). I don’t budget down to the penny but put enough in each Category to cover what I know the bill will be. These are the categories that keep a roof over your head, lights and heat on, able to legally drive your car*, etc. These are also the categories that, if you don’t pay, someone will come a-knockin’. 2 minutes.
- Next, I fund the living expenses categories. These are the categories that are truly important to living a human life on this planet (you know, eating, getting around, buying cleaning supplies, buying postage to pay bills, etc) but there is flexibility in amounts. For example, if you usually put $250/month toward food but you had a financial emergency and the only place from where you could squeeze money was your Groceries category, you could theoretically do it and live on Ramen and frozen peas and oatmeal. Not all at once, but still, yum. Examples: Groceries, Fuel, Household, Car Maintenance, Memberships (gym, annual Amazon Prime, YNAB). 2 minutes.
- NOW, I fund the fun categories: Sexy Hair, Clothing and Luxuries, Dining Out, Entertainment, Giving, Vacation. Yes, I still funded these while I was getting out of debt. No, Dave Ramsey wouldn’t have approved but staying realistic was critical for me. And I definitely cut back and some months spent like $20 total on entertainment as opposed to 5x that when I wasn’t budgeting and tracking before. 2 minutes.
- Once I’ve built out the rough shell, I factor in what I know I have coming up that month and make some category adjustments. If Vacation is imminent (one is for me and I’m a lot excited!) I may bump up that amount a bit more. Also, if I know I’m going to be on Vacation for a week I know that household groceries are going to be less so I fund that category less. And the excess can go into Savings or Vacation. See how this whole flexibility thing works?? 2-5 minutes of sheer fun.
- There should still be money left in the Available To Budget holding spot. That is the definite bonus goal. Now do something with it – put it somewhere! For the past 20 months or so my goal has been to maximize that amount to knock off whichever debt was Public Enemy #1 fastest. (In advance I had a plan for how much I wanted that amount to be and planned for it to be. This kept me in check as I budgeted #4 and #5.) Now that I have no more PEs (Public Enemies AKA Debts) I want that amount to be as much as possible for the sake of funding my Emergency Fund, and once that’s funded, it will be a House Down Payment category, etc….. The important part is that you get that money out of the public eye (basically out of a spot where you’re going to see it and think that you have a ton of wiggle room for off-category spending: YOU DON’T) and safely put in its spot. You may decide, very intentionally and in a train of thought that makes sense only to you, that your extra money should go in a Category for Bubble Gum or something lame. That is actually fine, as long as you get your money out of the everything-goes Available to Budget spot and safely where you need/want it. 2 minutes.
So there it is. My budgeting ritual. Doable? Totally. Fun? Oh yes yes yes! You can do this in ~15.1 minutes (tops). That’s pretty easy to carve out in this day and age of social media and getting lost in those feeds for an easy 15 minutes. And then you live by the spending plan you just made and make adjustments when you need to and revel in the peace of living within your means. It feels a little bit like this (queue “Oh What a Beautiful Morning“ from Oklahoma – thanks, Mom, for raising us with that song!):
*Remind me to tell you about the time my driver’s license expired two months previous and my car insurance was accordingly cancelled. All during a time of life when I was driving a couple thousand miles/month between 4 states. #gratefulididnthurtanyone #divineprovidence