What is a budget? Sounds like a pretty self-explanatory question, right? Well, I thought so too. So years ago, I made myself my very own budget on a fancy spreadsheet. If you know me, you know I love my spreadsheets. I have been using that spreadsheet ever since then (until recently). I named it…you guessed it…BUDGET. I would open it, enter numbers and do calculations multiple times per week. Do you know where it’s gotten me financially? Nowhere. So let’s talk about what a budget really is, what I’ve learned so far, and then I have a free budget template for you!
See, what I was doing was just using the spreadsheet to do basic math, like this:
I currently have X amount in my account.
Plus, I am expecting this, this, and this to come in (freelance life)
Minus, this bill, this bill, this bill, etc.
Equals, a sum amount of money that gave me an idea how much I had left to spend for the next week, two, whatever.
This was my budget. But it wasn’t really a budget at all. It was just calculations on a spreadsheet that happened to be named BUDGET. No plan of how I was going to spend the money that was left after the bills were paid. Better yet, save the money, or what expenses would need to come out of it like gas or food, or what might be allocated for future expenses. Not a good plan, Jessica. Not really a budget.
So, what is a budget?
The actual definition of the word “budget” is an estimate of income and expenditure for a set period of time. While that sort of sounds like what I was doing, I wasn’t actually budgeting. I was just keeping an idea in mind of how much money I had available to spend, and then spending it frivolously with zero planning or thought. Which, does not really make any sense at all when I am paying over $500 per month in student loan debt and my husband and I both graduated college a decade ago.
First, let’s talk about the problem
For starters, I have never in my life followed a budget. For years, I have just spent money without a plan, whenever and however I want to. Any time I want to buy something, anywhere, I just do. Unless it’s something “expensive” and then I claim I can’t afford it, when in reality I just waste money on useless things that are “cheaper”.
It’s almost sickening to look and think back over the years at all of the money I’ve thrown away, all while complaining about my student loan debt. Makes total sense, right?
Case in point: Jessica wants a new dining room table. Jessica says she cannot afford a new dining room table because it’s over $1,000 (and that’s before chairs). So Jessica has the same dining room table that her now husband’s mother gave him when he was a bachelor. However, Jessica was miraculously able to afford a Venti Iced Chai Tea Latte at Starbucks any time she wanted for the past several years. In fact, Jessica pulled her bank statement for the last 18 months and searched on the keyword “Starbucks”, and found that she had spent a total of $2,117.80 at Starbucks in just 18 months. That’s an average of $117 per month.
(In Jessica’s defense, part of that is food for the kids, because we like their bento boxes for lunch. Disregard, this is indefensible.)
If Jessica had been smarter, she would have figured that out a long time ago. When Jessica did figure that out, she felt like a real big dummy.
Now let’s talk more about how some of us live that makes zero sense at all.
I know I am not the only one. You may be reading this and feeling like you and I are the same person. And if so, I am sorry I called you a big dummy. We can recover though. Live and learn, my friend, education is expensive.
Here’s the thing. For years, I have been able to afford Starbucks, eating out, and everything that has ever been in the Target dollar bins any time I wanted. Yet I’ve been too broke to pay off my student loan debt early, or buy a pair of jeans for $70 because I “don’t like to shop or spend money”. But I’ll blow $70 on dinner at the Cheesecake Factory on Tuesday night and not think twice about it . See the problem there?
Where has that gotten me? Frustrated. Frustrated with a house full of clutter I don’t even want that just stresses me out, student loan debt I should have and could have paid off years ago, and a major need for change. Not pocket change, though I could use that too at this point. But life change.
It’s time to put on my big girl pants and start managing my money like a real adult. This is very adult-ish stuff I am doing lately. I’m basically in full life make-over mode. I’ve gone vegan and gone on a budget at the same time.
So what is a budget, for real?
Come to find out, a real budget lays out all of your expenses for a certain time period, accounts for savings, sets limits on spending by category, and allows for goals to be reached. The expenses, savings, limits, and goals are all up to you. The point is, it’s an actual financial plan with pre-determined parameters to follow for managing your money.
Start by learning your expenses. You can’t budget if you don’t know what to budget for.
So after a lot of research, I got my hands on a budget template and then customized it to my liking. It was then I realized that I needed to actually know what I spend on things. At that time, I had zero idea what I had been spending on groceries, gas, or anything else. I never tracked this stuff.
Related: 10 Easy Ways to Save Money on Groceries (without coupons)
Starting to track my spending by category has been a huge eye opener for me. And I never thought I’d say this, but it’s actually been pretty fun.
If you use a debit card for most purchases, it’s very easy to figure this stuff out. You can go into your online banking and download your activity for a set amount of time into Excel, and then sort it by description. This way, you can start separating things by category, and use a basic Excel formula to get the sum total of each “category” of spending.
For example, I was able to pull out all of the rows with purchases made at Publix and paste them onto a separate tab for grocery spending. I was also able to find all of my gas purchases, eating out or delivery, you get the idea.
Once you know your expenses, you will have a better idea of what to budget for each category.
Now, here’s something I learned: just because you currently spend X amount on one category, that doesn’t mean you need to continue spending that amount on that category. For example, I realized I was spending more than I really need to on groceries. I can certainly reign that in and shop smarter, waste less food, and save money in that category. With that in mind, I took the amount I was spending and cut it quite a bit to set a reasonable budget. Now, I will note that I am only two months in to practicing this new budget life, so I am learning as I go. The limits I have set for each category might end up being adjusted as I learn that maybe I really need less here, more there, whatever it may be.
I have really actually enjoyed this process of getting more familiar and more intentional with my money. Because we just had baby #3 three months ago, I had to add diapers and wipes to my monthly budget. However, the first month I followed a budget I didn’t even think of things like diapers, wipes or dog food. Those expenses actually add up to a large sum, so it’s good to know what I am spending on it per month and make sure it’s in my budget.
Related: 10 Easy Ways to Save Money for Christmas All Year (And Get Free Gifts!!)
Now that I understand budgeting better, here is my plan:
I am by no means a financial expert. I am just a mom of three who works from home, brings in an income and finally figured out I need to be more responsible with it. My budgeting plans will most definitely evolve along the way, as I learn and as our financial situation inevitably changes. For now though, this is my plan:
- Set and follow my budget every single month.
- Use “extra income” I make and save each month to put towards debt and pay it off faster. By “make” I am referring to freelance income and income from this blog that I don’t currently need to cover my budget. By “save” I mean the money I will save each month by actually following a set budget rather than spending on pointless junk we don’t need.
- Sell stuff in our house to declutter and put that money straight towards debt. We have a lot of stuff. Too much stuff. Some days, I feel like the walls of our house are closing in on me. Stuff does not make me happy. Having less debt will make me happy, and make our goals of traveling with the kids possible.
- Refrain from unnecessary purchases in order to stick to my budget and put more money towards debts.
The budget I am using + free budget template
The budget template I found and customized has been helping me so much. With it, I can account for every single penny I am spending and then see how it works out at the end of the month. What I am doing is creating a tab on the sheet for each month, so if I think of or become aware of something in June that will need to be paid in July I can go ahead and add it to July’s sheet before I forget.
Also, every day I am spending just a few minutes adding any spending to the sheet. So if I went to the grocery store, I just add it into my grocery spending real quick. You could also just sit down and do this weekly if you pay with a debit card or keep all of your receipts so you don’t lose track. I added a “Tally” column for easy addition of items throughout the month, so I don’t need to break out a calculator.
Here is your free budget template:
I used my template to create this free budget template for you to use. I left some examples in the sheet so you can see how it’s meant to be used. However, all of the headers and cells are customizable so you can enter your own income and expense categories as it works best for you.
Now that I have gotten into it, budgeting, finding ways to spend less and save more money, and focusing on the goal of paying off debt faster has become really fun for me. It sounds crazy, I know. But I think it feels good to finally do what we know is going to better our life. If you feel stressed over money, taking complete control is the best way to handle it. Like I said, I sure as heck don’t have it all figured out and I am no expert on money. I am 32 years old and just started using my first budget ever. It’s never too late to learn and be better though!
I will be documenting my journey of budgeting along the way and sharing what I learn and how it’s going, so be sure to subscribe to my email list for updates! If you found this post useful at all, please be sure to pin it to Pinterest as well, and share the link on Facebook! I appreciate your support and even just reading what I take the time to write.
Photo by Sharon McCutcheon on Unsplash
Hi, I’m Jessica! I am wife to Chris, and mom to Kaiper, Alana and Koa. I am a graphic designer, website developer and aspiring author. In this space, I share about everything from parenting, working from home, food we cook, and lots of things for kids! Learn more about me here.