I think we can all agree that the American school system doesn’t exactly set students up for financial success. I’m sure you probably learned all sorts of Algebra but no one was educating students on how to make a budget. No one was teaching a class on credit scores and why debt mostly sucks. Then, they sent you out into the world expecting that this stuff would just come naturally, I guess?
Well, that was then, this is now. Now you’re an adult. An adult who was born in the time of YouTube, Ted Talks, THE INTERNET. There is no longer an excuse for not knowing something, literally, the answer to every question is out there. So if you have been holding off on budgeting because no one ever taught you how, welcome friend, I’m about to teach you.
There are so many sites dedicated to building budgets, pretty spreadsheets, fancy phone apps, vlogs, blogs, and podcasts. It’s so much information and it’s all helpful, but honestly, you only need 20 minutes to get started. When you’re just trying to get your shit together fast you can’t really beat 20 minutes, right?
Here’s the thing. The reason you can create your budget that quickly is because it won’t be perfect. You could actually budget every month for a full year and it probably wouldn’t be perfect. The point isn’t being perfect, the point is getting it done, the point is starting and sticking to it. You don’t need to be a finance whiz to begin a budget and you don’t need any kind of special skills to try and keep trying, even if things don’t go as planned.
So keeping all this in mind, let’s start:
List Out All Your Bills
Most budgets start here, it’s simple and straightforward.
Take all the bills you pay each month and list them out. Your rent (or mortgage), car insurance, credit card minimum payments, gas bill, daycare.
Shake everything out of your brain and put it on paper or into a quick Google Doc.
Determine how much those bills cost you
Take that stack of bills and add them up to determine how much they are costing you each month.
Notice I didn’t tell you to add groceries or gas for your car? Those are every month expenses, yes, but they also vary from month to month and you can be in full control of how much they cost.
This bottom line number we are calculating is how much life is charging you to live it. You can’t decide to not have an electricity bill, or rent, or pay the city for water (or maybe you can). These are real costs that come due each month.
Sometimes there’s some shock seeing those real numbers all lined up and added together. Maybe it’s a lot of money OR maybe it’s less money than you realized but it FEELS like a lot of money. Either way, there can be some serious emotion behind those numbers.
Divide your bills total by number of pay periods
I have found that the easiest way to make sure all my bills get paid is to make sure that I have the money sidelined for those bills before the paychecks hit my account. One way I do that is by dividing the total number of bills to pay by the number of paychecks I get in a month.
So, if you have $4,000 in bills and get paid twice you need to definitely be making more than 2k per check. For our budget we get four checks in a month since my husband and I both work. It works out to a paycheck a week which is a little easier to work with.
I make sure that when my check hits I either have the set bill amount directed to my Bill Pay Account or I manually move it over immediately.
Open a separate bill pay account
That brings us to another side point that I think is very important. Open yourself a separate checking account for your bill pay money and ONLY use it to pay bills. Don’t let any other funds trickle out of there.
That account holds exactly as much money as you need and only bills come out of it so it’s easier to balance. You can add a little extra in there just to make sure you never go over but as long as you keep track of what’s coming out each month you’re pretty golden.
No more accidental overdrafts for bills you forgot were coming out. No more wondering if or when you can pay a bill. It was a huge relief when we started using this method and it’s been almost seven years now and it still works.
What’s left over…
Here’s the thing with what’s left over… you kind of can do what you want with that. I mean all your bills have been met, your immediate obligations are fulfilled.
For a lot of years what was left over for us was just enough to pay for groceries and gas for the car. There wasn’t extra for savings or buying luxuries. I mean, we were a young family paying for diapers and formula and just trying to keep it all afloat.
If that’s where you are too, that’s fine! I’m sure you didn’t look ahead to your grown years and think “Hey, when I get older I just want to pay my bills and feed myself… that sounds perfect”. I just gotta say that getting to adulthood I realized that doing all those thins WITHOUT going into debt to do it was actually kind of a dream. If you think about it, just making a plan to pay your bills is putting you like eight steps ahead of a majority of the population. Good for you!
We put our “left over” money into a separate checking account we call our Expense Account. We each have a card and from here we can buy groceries, dinner, stuff and thangs. It’s a little open ended and sometimes we are stricter with tracking it and sometimes we are not. It allows us to be flexible without having to worry that we can’t pay a bill.
Keep going and don’t stop
So, that’s it. That’s how I recommend making a budget in 20 minutes or less. Literally, that is all you need and there is no reason to get crazier.
Here’s why, if you decided to start working out would you start by running a marathon? No, you would start by walking for 30 minutes a day or joining a gym and trying a class. If you go too hard you’ll quit, it isn’t sustainable and you’ll burn out.
It’s the same with budgeting. Consider yourself building budgeting abs and biceps. It’s not so much about how much weight your lifting it’s about consistency and never stopping. So promise yourself you’ll set the budget and you’ll come back. Even when you over spend on gas, or forget that one random bill that only comes out once a year (I’m looking at you, Amazon Prime Membership).
You’re not going to quit. You’ll keep tweaking and finding what works for you. You’ll adjust, recover, shake it off and keep going!!!!!! Also, you’ll learn more, so much more, and eventually this baby budget will be a HUGE financial plan.
Won’t you be so proud of yourself when you get there? You will and you should be, because you’re freaking awesome, my friend!