Some New Year's resolutions this year (or every year) will be about money - budgeting, saving, a goal to buy a new car, payoff student debt, etc. So let's talk about it!
First off, let's talk about budgeting. I've posted before about using Mint.com but I can't say it enough how much I love it. Linking your bank accounts, classifying your expenses and income, then getting to see bar charts and pie charts and watch your budgets use colors for whether you've spent too much, or are right on track....My favorite things guys! For those of you who don't love that stuff as much as me, I'm going to break it down as to why you should still use it anyway, or some type of budget AND tracking system.
You can have as many budgets as you want, but if you don't actually track where you spent your money, how is it helpful? It's not. You must track your money! You have to gauge how well or how badly you are doing on your goal.
I do a few different things - in addition to my monthly budget on Mint, I also have an Excel spreadsheet (shocker, I know) with 'rough' budget numbers, my credit card balances, my total income (gross-before taxes and retirement and net-what actually gets deposited into my bank account), my SIMPLE IRA contributions, and my percentages of savings and expenses.
So....let's start with the percentages:
I like to see 10% of my money being saved - I combine my retirement savings and my savings account contributions together to make the 10%. Out of each paycheck, a specific number of dollars go to each.
Also I like to see what percentage of my income go to each of my expenses - so if I pay (hypothetical numbers everyone) $700 for rent/mortgage and I make $4,166 per month ($50k per year), that is 16.8% of my income that goes towards my house payment. According to Dave Ramsey- housing should be <25%. I do this calculation for all of my expenses. This helps me realize what I'm spending the most money on, what can be cut out, what can be downsized or what I have extra money leftover for. It's not always about what we have to cut out, it can also be about what we GET to have for extra fun.
Some percentages I like to go by:
-Giving/tithes/charities 10%
-Savings 10%
-Housing 25%
-Utilities 5-15%
-Transportation 10%
-Food 10-15%
-Health 5-10%
-Recreation/personal spending 5-10%
There are plenty of different scenarios where these numbers could or should change, and no, it doesn't include every SINGLE type of expense you may have. These are guidelines. If you're wayyy over on transportation, then look at the why. If it's something you can change, if you want to save money, then there you go-the percentages helped you out. Another number on transportation - the total value of you vehicles should not be more than half of your annual income, don't be vehicle poor y'all.
My goal is to slowly increase my retirement savings, I would rather get to 15-20% before I'm 30, then keep it going as I get older. This is my personal preference, but you know retirement will come eventually - why not start now?
Some personal goals for this year regarding money, hopefully to help inspire you guys, but also to keep myself accountable:
1. Pay off my credit card every week, don't let a monthly balance build up. If I pay it weekly I can really look and say 'why am I buying this or that' (P.S. this is my Amazon card I'm talking about *eye roll*) Also note -- I use a credit card to earn points, and also to help keep my banking information safer -- if you are not good with credit cards, or you're trying to payoff debt, then don't use a one.
2. I am going to start a Christmas savings account in February, I know a lot of people already do this, but I'm behind on it and I forget about it until November (not helpful), so I will be putting money in each month, then on Black Friday I will have all the Christmas money I need, and won't have the notion to be stingy (maybe).
Another Christmas tip I read was that if you buy a gift card each month and stock them up, you'll have 12 gift cards to hand out at Christmas - I like it!
I can't recommend Dave Ramsey enough, his basic principle is to put all your extra money towards paying off debt, add it to savings, anything that you don't NEED- use it to make your life better. He says "If you will live like no one else, later you can live like no one else." Meaning that if you live like you're poor now --cheap cars, no takeout, don't buy new clothes for no reason - and you use that money for a purpose like savings, retirement, paying off your car, paying off your house, pay cash for your kid's college --- then later on in life you get to live like no one else will, you'll have everything paid off and you'll live like a Queen.
If I can leave you with a couple words for now, about money I say: budget so you know where your money is going, cut out everything but the basics if you want to save money, and take charge -- you work hard for that dough, make calculated decisions because it can disappear much quicker than it took for you to earn it.
xoxo,
Christine