Budgeting Basics - Where Do I Start?

This is a common question for many people new to the budgeting world who aren’t quite sure what’s the first thing they should do. Many like the idea of budgeting, but are afraid to take that first step in creating one, following through with it, or doing one consistently. Sometimes just getting started and doing your first one can give you the momentum to keep going and getting into the habit of doing a monthly budget.

What is my first step?

Acknowledging you need to do a budget, really is the first step. However, there must be action that comes next. If you are in a relationship where you share finances equally, you and your spouse must be on the same page. Set a time aside to talk specifically about your budget. Rachel Cruze on the Dave Ramsey team likes to call this the “Family Budget Meeting”.

How do we have a “Family Budget Meeting”?

During the “Family Budget Meeting” time, items you and your spouse need to talk about include: goals to reach by doing a budget, reviewing of last month’s budget, how much money to allot to each specific line items (i.e., groceries, utilities, transportation, entertainment, etc.), and any adjustments you need to make from the previous month’s budget that you’d like to address for the upcoming month. FYI – there will be disagreements. And that is okay. There are two people and two opinions coming to the meeting; as Rachel always says, the “nerd” (the one who wants to crunch numbers) and the “free spirit” (the one who’s ready to spend the cash). The goal is that you both show up, and both learn to discuss and collectively decide on a common goal of how to spend your money.

This meeting should take place the last few days of the month, so you can plan for the upcoming month’s budget (ex. February 26th or 27th meeting date to plan for March budget). Plan for roughly 30 minutes (as you progress these may get shorter in length), limit distractions so you can give your full focus to the task at hand, and sources have told me, if someone brings a snack to the meeting, nobody is probably going to complain about that little treat!

What if I am single?

Yes, you can still do a budget. If this is the case for you, Dave Ramsey and his team suggest getting an “accountability partner”. This person is someone that you trust, is good with money, someone that can help guide you to spending your money wisely, and most importantly, help keep you accountable. You should sit down with them monthly to go through the same discussion topics listed above. After some time, you may feel you can move on and do this on your own, but for starting out, you should have someone with you to help keep you on track, and keep giving you the motivation needed.

Are there any tools out there to help me with budgeting?

You have your traditional pen and paper method that you can write everything out.

For all the “nerds” out there, a detailed, itemized Excel spreadsheet will work too.

But if you’re in the mood for an already created, simple, and user-friendly budgeting website created by Dave Ramsey and team, EveryDollar is for you! And *Bonus Feature* there is an app for you to download to your phone so now you can budget on the fly!

Also come to the meeting with your bank account information, either log in online, or have statements ready in hand to review. You need to have accurate numbers on monthly income going into your account, and know exactly what expenses are going out each month.

And the biggest tool you can come to your monthly meeting with is an open mind. Be understanding that your budget may need to change from month to month to accommodate what you have going on in your life. You may have to give something “up” to make sure necessities are getting taken care of before the wants. You may also learn that what worked one month for a budget, may not work as a rinse and repeat system.

I don’t want to do a budget because I don’t want to feel like I’m not allowed to spend my money.

Following Rachel Cruze’s tagline, “a budget gives you the permission to spend your money!”

Yes, by doing a budget, and saying how much you will spend on different things each month lets you spend your money the way you want to, without feeling guilty. So, if you are someone who likes a tasty treat from the drive thru, make sure you give yourself some spending room for that iced coffee, or hot and salty French Fry for your afternoon pick me up! Whatever your guilty pleasure is, the budget allows you to enjoy it…. guilt free!

But I’m not in debt, should I still do a budget?

A budget will never bring you harm. Knowing where your well-earned dollars are going every month is being responsible. It also gets you in the habit that if one day you do decide to start saving for something down the road (i.e., house, vacation, wedding, you name it!) you know where your money is going on a monthly average that you can make a quick adjustment here or there to help get you to that “want” faster.

Also, knowing where each dollar is going every month, rather than looking at your bank account one day and going “EEEKKKK”, will also help keep you OUT of debt.

If you need help getting your budget on going or on the right track, please reach out to your Whitaker-Myers Wealth Mangers Financial Advisor today and they'll get you connected with our in-house financial coach!

Author: Lindsey Curry