Reader’s Request: Budgeting Part 1
Hey guys! Hope your Friday has been fabulous 🙂 I’m finally here in Orlando with the fam and have some fun dinner and shopping plans.
But first, the reader’s request post on budgeting.
I get a lot of emails about how to make and stick to a budget, especially when you happen to have expensive tastes (in clothes and food!) as I do 🙂 It’s definitely a balancing act but you can make it work and save a lot of moola in the process.
Here are some of my favorite budgeting tips and secrets. I doing it in 2 parts (the second part will be up on Monday afternoon) because I’ve got so much to say! 🙂
Disclaimer: I’m not a financial professional, even though I have a BS in Finance from the University of Arizona. All of this info is from my finance education and personal experience, and is meant to be taken with a grain of sea salt. As always, check with a local financial advisor if you need more help with budgeting and finances.
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For life:
– Decide what is most important to you regarding money. We all have reasons and motivations behind why we want to save money and what we prefer to spend our moola on, so think about your financial values. Are you saving for a big vacation? Want to pay off your car? Make ends meet more comfortably? Have a luxurious retirement? Your short-term and long-term financial goals should be in your focus as you plan your budget and choose to spend and splurge. (In other words, thinking about our Bahama vacay made me put down the new pair of Sevens jeans. Even though our trip was paid for, I couldn’t justify blowing more money on designer denim when we had an expensive trip coming up)
– Put together all of your receipts for a month, or go through your bank statement to see where your money is being spent. Write down areas that you can cut back- you’ll be surprised on how much money can be wasted with dinners out, movies, takeout and debt interest rates.
– Add up how much you’re earning monthly from your job. This is your fixed income. From your receipts and purchases, total up how much you’re spending each month for fixed expenses such as housing, utilities, phone, car payments, insurance, student loans and minimum payments on debt. These are your fixed expenses.
– Next, determine how much money you spend monthly (on average) for variable expenses, such as nights out, medical bills, groceries, pet expenses, gas, etc.
Take Fixed Income – Fixed Expenses – Variable Expenses = Discretionary Money <—- What you have left over after the bills are paid
-From your discretionary income, pay yourself first. This one is so important, especially since money is easier to spend on random things if it’s just chilling in the checking account. Set a specific amount to put into savings out of each paycheck, whether it’s $25 or $500. Be conservative with the amount, but every little bit adds up. This will guarantee that you’re consistently saving money, no matter the amount. We have money drafted out of the checking account into our mutual fund as soon as we get paid. If it’s not there, we won’t spend it.
– Pay off high interest debt. Find out how much you can contribute over your minimum monthly payment for high interest debt, such as credit cards. Anything extra you can do to get those bad boys paid off is a GOOD THING, and remember every little bit counts. Credit card interest = money in the trash
– Whatever you have left, subtract a conservative amount (to invest, save and/or donate to a charity of your choice) and then divide by 4. This is your weekly allowance 🙂 This is the money I use for fun random stuff, like clothes, spa treatments, girls nights, etc. Sometimes I spend all of it and other times I don’t, but it all balances out.
– If you’re super nerdy like me, make an Excel spreadsheet with a column for money coming in and out (and when payments are due) and at the bottom, list your goals. If you want to pay off a credit card, put the balance you have left on the bottom of the screen and you can watch it dwindle away as you make payments each month. I make an Excel budget for each season, send it to the pilot to look over and we make changes as necessary, and it’s kinda fun to keep track of things together. This way, we also make sure that payments aren’t late for bills and stuff of the like, and can save for fun things, like vacations 😀
– Make sure to have at least one savings account, whether a traditional savings, money market, CD, IRA or another form of retirement savings like 401(k).
-When I’m shopping for clothes, food, whatever, I try to be extra savvy about spending.
In part 2, I’ll go over my food moola saving tips, but for fashion stuff:
- Splurge on designer classics save save save on trends. Designer jeans are 100% worth the hefty price tag- they fit AMAZINGLY and I wear them until they fall apart, which takes a long time 😉 Trendy stuff isn’t worth the high price when it will be out-of-season soon. My skinny jeans are from Forever 21 and I’m pretty sure I paid $12 for them. This way, I won’t be sad when they’re donated to Goodwill next season.
- Same goes for purses- splurge on classic and save on trendy. Since I was in college, I’ve treated myself to one designer purse each year (I had 3 jobs in college so I could afford it). The pilot gets me a purse each year on my birthday and the designer bags last forever. Trendy purses come from Forever 21 and if you find one that you love and looks great, no one will know you paid less that $20 for it.
- Shop at the end of the season. Try to scope out which styles will still be in style for the next season (usually the magazines and hype is already out) and dig through the clearance racks. For example, I knew that maxi dresses would still be in style even though it was winter and way too cold to wear them. I got two maxi dresses from Off 5th (original price for each $180) for $42. Total. TJ Maxx, Nordstrom Rack, and Ross also have awesome finds if you’re willing to treasure hunt.
- Use coupons! Many stores ask you for a phone number or email address when you check out- GIVE IT TO THEM! I get SO many store coupons in the mail and sometimes I use them, sometimes I don’t, but the discount is there if you want it! Express sends me coupons all the time and I use them for a lot of my Express finds- $50 off $150 is an amazing deal.
- Google is your friend. If you’re an online shopper like me, retailmenot.com has a list of all of the current discount codes for many stores. Almost every time I purchase something online I get some type of discount and/or free shipping. Just google “store name coupon code”
So there are most of my tips for “life budgeting”. Any money saving tips you’d like to share??
Part 2 on Food Budgeting will be up on Monday afternoon.
I’m off to dinner!:D
xoxo,
Gina
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Thank you so much for this post!! My hubby and I are going over our finances tonight and putting together a budget and these tips couldn’t have come at a better time 🙂
These are great tips! I am sooooo bad when it comes to finance. Luckily I married a guy who works in finance, so it all evens out.
THANK YOU!!! I just got new job and needed to sit down and replan my monthly budget. Thanks for the great tips!
Great tips!! I am ok with budgeting especially with groceries! I swear for 2 of us we pay more than an average “bad eating” family of 5! I tend to not like to deprive myself of good quality and nice things….hahaha so I also focus on making more money! I can’t live without my denim….or shoes…..or purses…..oh the list goes on!
XXOO
Spending money on GOOD food is totally worth it! 🙂
So this is totally inappropriate, but I live in LA, and when I saw “blow” as a category on the pig I couldn’t stop giggling. That definitely means something else in this crazy city.
These are such great tips.
Im pretty good at budgeting my money, I managed to rack up some serious debt for myself awhile back, and I learned my lesson!!
Working at a bank helped too, especially because I spent half the day looking at my bank balance!!
One thing I have to suggest is to decide if you really need that credit card. It’s much harder to spend money if you don’t have it. School and auto debt is one thing, but to be in the hole because of a flatscreen tv and stereo system is another. Way too many people right out of school/college look at credit cards like free money and then they get in way over their head.
Thanks so much for the tips!! It’s great to know that some designer things it’s worth paying money for and other things it isn’t.
Thanks Suzie Orman! I’ve been big into budgeting and doing experiments to prepare myself for when I really will have to be financially dependent after college. I’m a huge saver though!
I totally agree about splurging vs. saving on different products–that’s actually what I wrote about today. For me, it’s important to spend money on quality clothing pieces (good shoes, nice work clothes) and good kitchen items like Le Creuset and dishes that aren’t made in China. But for anything trendy, or something I only plan to have a couple of years (like my IKEA coffee table) it’s worth it to save.
Ooo thanks so much for the coupon code tip! I could have used that actually when I splurged shopping online last week! hahah 😀
Great advice! i’m really had to learn how to budget this year living in NYC- I pretty much dont’ go shopping anymore unless I absolutely need something and I have to love it! I used to buy clothes just to buy clothes and now I shop for more of a purpose.
as of tomorrow i am a college graduate and i NEEDED to read this. soooo important. my parents taught me nothing about budgeting money (not because we had a lot just because they never save anything) so i’m pretty clueless as to what to do with money. thanks a million for this!!!
Budgeting is so important! I am the queen of online shopping, and friendly reminders about budgets and paying the bills is a really great help to keep me on track!
I’m a total personal finance geek! I love to look at how we are spending money and how we can save more. I use http://www.mint.com and its 100% free and works really well. You have to do a little tweaking with their budgeting stuff, but overall it works great.
I second mint.com! It’s a great way to track where your money is going each month without doing the work of inputting everything in a spreadsheet.
Oh hi there, Suze Orman. I love this!!! Also, a tip to anyone with insane credit card debt: hit up your bank and/or credit union and see if you can have a loan to pay off your debt. I had a pretty amount of credit card debt, with some cards over 30% interest (despite me having an excellent credit score of 785, but still a high percentage of debt) so I wasn’t getting ANYWHERE. I went to my credit union, got a loan to pay them off, and am now working on that with 9% interested (compared to the 30%). The only requirement is that I don’t use my cards, but once I pay this off, I can get a card with them IF I WANT IT. Credit cards are NOT your friend unless you can pay them off entirely or mostly every month. If you can’t pay with something for cash up front, it probably isn’t worth it. It sucks looking at all the stuff I have thinking that I didn’t really pay X amount for it, but X amount + whatever interest, too. It’s a bummer but a lesson I had to learn.
Awesome post! I generally find that if I just stay away from the malls, I spend less. I do however, have a very VERY soft spot for food, so my personal grocery bills are probably about the same as a mother shopping for an entire family! I don’t eat out much though, so I like to think that justifies it. Nevertheless, I’m still looking forward to your part #2!!
you are so right to save for stuff that actually fits well…i don’t care at all about labels, but i do love something that fits like it should! that is worth the price tag every time 🙂
Omg, did u look at your piggybank??? “blow” =drugs!! Bad piggy!!
hahaha NO i didn’t even notice! picture was changed. yikers!
haha i think it means “save” and “blow” as in blow on whatever you want, but i admit i saw it and thought the same thing!
hahah i got rid of it just in case 🙂
Great tips about fashion! I totally agree on splurging on the classics and saving on the trends AND $$ for designer jeans!
Enjoy your evening!
Love this post! I budget super similarly to you and I completely agree that you should spend $$ on staples such as nice designer jeans and classic items like a trench coats, little black dress and the like.
this is GREAT! especially the fashion tips: I LOVE Off Fifth! …and I’m with you on the handbags, I have quite a collection, but even the ones I’ve had for years look great if not new… they’re investment pieces!
…and I love to shop online (love getting mail and packages delivered!!) and ALWAYS google for the promo codes! 🙂 It works almost every time and if nothing else it’s for free shipping!
I just have to say again I LOVE your blog and look forward to reading 🙂
i loved this post, gina!! kristin at iowagirleats just went over this a little. she uses mint.com, which is GREAT!! it’s a safe and secure way to keep all of your accounts in one place. you can categorize all of your expenses and then budget for each category, so that when you spend money in that category, it automatically adjusts your budget. it is great!!! you should try it! i was an excel girl ti i found mint 🙂
great tips!! i swear, my big splurge on adriano goldschmied jeans was the best decision ever! i wore them like EIGHT days in a row in italy and they didn’t stretch out at all!
Good advice! My two recommendations are instead of treating retirement/saving with your discretionary money, I treat it as a bill. I also break down our vacations/upcoming life events over a few months. For example, we usually spend a lot on travel over Christmas so we dedicate a portion of money every month to that trip. With that, we also have a house fund to be used on home improvements, and a dog fund to help offset large expenses.
My second budget tip would be to consider instead of paying off the highest interest debt, pay off the smallest balance one first. This is a Dave Ramsey rule but it is helpful and makes you feel like you accomplished more. By paying off the smallest payment, the idea is to do a debt snowball and apply that payment to the next largest loan.
One more tip — if you’re married/partnered, sit down every other week at least and go over your budget. We talk about upcoming life events and costs, things we want to do, and we occasionally fight over how over budget we are on some things and where the best compromise is. We have very large financial goals and commitments and making a point to discuss it (usually every other Sunday morning during Meet the Press ‘cus we’re old like that) has helped strengthen our relationship. Plus, it makes it easier to say no to an impulse buy.
I love your idea of having a house fund for home improvements and such. My husband and I just bought our house a little over a year ago(first house) and there are still quite a few improvements we would like to make, especially niw that we have a little one in the mix. We put money away and are currently trying to pay down some debt, but a fund specifically for the housexwould be helpful. I sometimes get spending guilt/anxiety when we make purchases (especially large ones) that may not be completely necessary. Having seperate funds for seperate things would be helpful.
This was such an informative post, Gina! You are absolutely right about everything and I can only imagine that your advice will help a lot of people! Have fun in Orlando 🙂
Thanks for this post! I could definitely use these tips. I spend wayyy to much money on groceries and dining out. I should probably find a few ways to cut back. 😛
We have no credit cards or checks. We have ONE debit card, and use cash 90 % of the time. Helps to see how much you’re spending.
I shop SECONHAND for clothes first, and if I can’t find what I need then I’ll buy new. We do splurge on food though-only because we can-because of the aforementioned strategies:)
Great advice, Gina! I need to start implementing some of that into my own life! I’m looking forward to your food budgeting post. Have a great weekend!
Wow that you for sharing! I am TERRIBLE with money – All I ever want to do is shop lol. Can’t wait for the food budgeting post! xoxo
Fantastic post!! Love it!
I’m the budgeter for our little family to (just hubby and me) and it is so important to do, and works so well. Your tips are great and I will be using some of them. Do you think you could post a link to the spreadsheet you use? Or email me a blank copy? I would love to see it. I use one, but don’t really like it that much.
Thanks again for the post, it was great!
thank you so much for this post! A lot of it is common sense, but it is great to see how REAL people are applying it day in and day out. Great tips! I agree too on splurging on certain items that will last you a long time. I LOVE 7 jeans. Absolutely love them. We are on a stricter budget these days, so I stopped buying them. I have tried and tried to find a cheaper replacement and in doing so have purchased probably 6 pairs of 30-60 dollar jeans I don’t LOVE. I should have just saved that money up and purchased one pair of jeans I LOVE. It is a lot like eating healthy, sometimes you just need the real thing… even if it is asmaller portion. Can’t wait to see the food budgeting tips and summer shape up!
xo
Jessica
Great advise! I usually avoid the trendy clothes because I hate to buy something for one season, but your advise about shopping for trendy clothes at the cheaper stores makes sense! Duh! Actually, I’ve been doing that for my daughter, but it never dawned on me to do it for myself!
Thanks!
Can you do a post on student budget tips? I’m a full time student with a part time job. This post is awesome but can’t really apply to me much since I don’t have a lot of income, haha. I know nothing about finances or budgeting money and I’m kind of a shopaholic, so this helped me a lot 🙂 Thanks Gina!
Great post, Gina! I agree, designer jeans are SO worth the splurge!! Have you ever tried Hudson jeans? They are amazing. Love the tips for budgeting, I was just stressing over making a budget for myself so I definitely took down some notes, thanks 🙂
Hey, awesome website. I actually came across this on Ask Jeeves, and I am stoked I did. I will definately be revisiting here more often. Wish I could add to the post and bring a bit more to the table, but am just absorbing as much info as I can at the moment.
Thank You
Dog Toys and Clothes
Hi, I was also wondering if you’d mind sharing your template, but without the personal information. I’ve just crossed the huge hurdle of one of my debt areas (student loans for multiple degrees, ugh). Thanks!