B-U-D-G-E-T. Just the word "budget" can cause the bravest of us to quake in our boots! That was literally the case for me not so long ago. But, with a little common sense, anyone can make (and stick to!) a budget.
Not too long ago, I was the kind of girl who spent over $30 per week on fancy coffee beverages and would then be absolutely perplexed why my wallet was always empty at the end of the week.
The idea of keeping track of my money--how much I made, where it was going--gave me chills; it just wasn't something I wanted any part of.
But my infamously empty wallet eventually forced me to face my budgetary woes. And I soon began to understand that a budget is necessary, and--surprisingly--not as difficult or daunting as it may seem. Here's what to do:
First, record all of your expenses for a couple months (or three).
Keep as detailed a record as possible, recording everything--every time you shell out cash for something, write it down. (Some people do this by hand; I use a spreadsheet on my computer).
Categorize your expenses into categories such as "Food" (restaurant bills, trips to the grocery store), "Entertainment" (movies, fun trips, magazines, gifts), "Housing" (rent, mortgage, cleaning supplies, home repairs) "Clothing" (um ... stuff you wear) "Self/Hygiene" (toiletries, etc.) and "Transportation" (gas money, subway money, etc.).
Record your income for that same time period.
After taxes and other things (child support? medical expenses?) are deducted from your pay, how much do you have left coming to you each month? You may have other income sources that you will also want to take into account--if they're predictable and reliable.
Now, which number is larger--the expenses or the income?
You certainly don't want your expenses to exceed your income--but, if that is the case, you'll know it's time to make some changes!
For example, when I first looked at my budget, I found that my expenses exceeded my income by $200. This hurt. But, that information made it clear: I needed to cut at least $200 per month from my expenditures. So then the question became, how?
To make that decision, I examined my categorized expenditure lists. Some areas I couldn't (or didn't want to) do anything about such as rent. However, the "Entertainment" and "Food" categories were ripe for some trimming.
Looking back at my three month history, I saw that I routinely spent $30 on cab fare on the weekends ... when I could have just taken the bus or biked to my destination or carpooled with someone. That's $90 right there. Also, on several mornings a week, I opted for an expensive latte rather than a free cup of coffee at work. That amounted to another $40 a month that I could easily cut from my expenses.
You may have to sacrifice things that you are important to you. But your wallet will feel better for it, and so will you.
Have a question for CallCaroline? Email her at firstname.lastname@example.org.
CallCaroline can balance a budget, but she's not a professional financier. Please use your best judgment on whether or not to follow her specific advice.