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Money Management

Why You’re Not Succeeding at Budgeting When Everyone Else Is

Why You're Not Succeeding at Budgeting When Everyone Else IsThis post may contain affiliate links. Check out my Disclosure Policy for more information.

Budgeting can seem overwhelming and managing your finances can seem like a major task that seems impossible to figure out. There are SO many different ways to budget and SO many different people pushing different ways to budget.

What’s the right way to budget? Should I try cash envelopes to budget? Should I use an app? What about using a spreadsheet? Ugh. There’s too much out there to figure it out. And then you’re back to square one and definitely not budgeting and definitely not knowing where your money is going every month.

I’m fairly certain that most people that have never budgeted before have similar questions go through their head. If you’re anything like me, you definitely did.

I remember absolutely panicking about my post grad student loan bill every month of $2,000 and thinking, “How the hell am I going to make this work on a teacher’s salary?!” I was 23 and absolutely freaking out about how I was going to afford my life in a few short months.

This is the moment that determines if you’re going to be successful with budgeting. There isn’t any crazy math knowledge required, no special courses, no specific way, really it’s very simply why people succeed at budgeting and others don’t.

People don’t succeed at budgeting because they don’t want to do the work.

Budgeting is simple, but it’s in those moments where it’s make or break. People simply don’t want to do the work that is required to budget.

They want the freedom that a budget would bring, but they don’t want to do the work. Budgeting is easy, but it does take some time and desire to have the freedom to spend money.

I do get it, there are SO many different ways to budget out there. The reality is that you need to just commit to something that tracks your money and start. What works for me, might not work for you. That’s why you need to do some trial and error and find out what works for you.

It’s going to take time and some work, but the results you will see are so worth it. I have a template for Google sheets available, if that’s something you think would work for you.

People don’t succeed at budgeting because they don’t want to face their reality.

I remember when I hit my reality moment before I graduated from my masters program and realized how tight my budget was going to be with my minimum monthly payment. All the blogs out there said a budget would be freeing, WTF did I just sign up for?!

The reality is that in the beginning, your budget is going to feel restricting because it’s a new way you are managing your finances. But, something that helped me a lot was really focusing in on my why.

I want to live a life that wasn’t governed by bills, wasn’t dictated by when I was being paid next or how much I was getting paid. I want to live a life that doesn’t require me to stay at a terrible job just because I need the money. I want to do work that I absolutely love, regardless of my paycheck.

None of that was my reality then and it still isn’t my reality today, but I’m getting closer to living that life. All it took was my one decision to change my future and create a budget that helps me to get there. I’ve now created a budget that allows me to spend my money on things that I value and I do whatever I can to save money on things I need to spend on.

As a twenty something that’s quickly moving towards my upper twenties, people think I’m absolutely insane to still be living with my parents. But, I don’t mind living at home for now and it allows me to reach my long term goals so much faster. My parents live in NJ, cost of living is ridiculous, which also means my salary as a teacher is basically the highest it would be in most other parts of the country. This means $0 towards rent while getting a higher salary.

This was planned and a major change I made in my post grad plans once I made a fake budget for post grad. You need to face your realities, so that you can make changes for your future to get you to your goals.

Budgeting is not going to be easy, especially at first, but I promise you it will definitely be worth it. I can’t even imagine where my life would be now if I didn’t start budgeting back in 2015. I know for sure I wouldn’t have paid off 6 figures of debt so far and I definitely wouldn’t be in a place to start thinking about moving out. So, what’s stopping you from being successful at budgeting? I’d love to help, check out my email coaching, if you’re struggling with starting. Comment below what’s challenging you!

Money Management

How to Budget on a Variable Income

How to Budget on a Variable Income

This post may contain affiliate links. Check out my Disclosure Policy for more information.

Utilizing a budget is something that can make your everyday finances much more manageable and allows you to see exactly where your money is going. When a budget isn’t being used, money “disappears” without you knowing it. This ultimately can lead you down a path of overspending. Everyone’s situation is different, so everyone’s budget is going to look different.

When it comes to budgeting, you need to find a way that works for you. This takes time and I promise the time you spend finding a way that works is totally worth it. If you try to use a method and you despise spending time working on it, then it probably isn’t a good method for you.

Some people have extremely extensive budgets that they spend time making pretty and Instagram worthy. I’m just not that girl! I love my simple Google sheets and Mint app used together to make my finances work.

Everyone’s budget is going to look different because everyone’s situation is very different. People are paid in so many different ways and most 20-somethings no longer have one single job with a salary, but more of a variable income. The norm is switching to having more than one job with many different ways of being paid.

With that being said it can be tricky to budget when you don’t have the same amount coming in every week or every month. After having a variable income the last few years, I have found a way that works for me and have helped a few of my clients apply the same steps to their unique situations.

1. Track your expenses and your income.

It’s so important to do this first. If you are someone that has been using debit cards or credit cards, you can easily pull your transactions and categorize them that way. If you have been using cash, keep your receipts and categorize everything you spend for a month. This will allow you to see where your money is going and create a realistic budget for yourself. You’ll get a free PDF template of my expense template when you subscribe, and my budgeting template.

You also need to look back on previous months and pick up on any trends in your income. For example, for myself as a teacher, I don’t get my salary in the months of July and August, so my income is much less these months. I was able to put a sinking fund in place for this when I got to creating my budget, but I’ll get to that later! See when your income is higher, when is it lower, is that trend something that is pretty consistent annually?

2. Create your budget.

In the most basic sense, a budget tracks your income and expenses. Since you have a variable income, you need to decide what makes the most sense for you. For myself, I only budget for my salary, my guaranteed income each month. If you’re someone that doesn’t have a guaranteed amount each month, I would budget for the lowest amount you have earned in the previous years. I would also recommend having a 6 month emergency fund to help you through those lower months, if something unexpected were to happen.

Another option is to create sinking funds for all your budget categories. This way any extra money you make in a higher month, can be used during a lower month. Ultimately, you need to do some experimenting to see what works for you. What works for one person, may not work for you. That’s why personal finance is personal.

3. Execute your budget.

Since you have a variable income, it is going to be super important to track your expenses closely during your budgeting period. The reason this is important is because if you have a lower income month, you will need to have a plan in place for this. Can you simply cut some expenses during those months? Do you have a sinking fund for your budget categories for these times? Are you using your 6 month emergency fund as a buffer? Personally, I would create sinking funds for this since it’s not an emergency, unless you lose one of your income sources.

As your budgeting period progresses, it is important to update your budget with where you are at in your expenses. This will allow you to make adjustments for the rest of the budgeting period. I personally do this on Sundays, so I know if I need to make adjustments for the upcoming week. Again, you need to determine what works for you, some people balance their budget every single day. It’s all about preference.

4. Continue and make adjustments to your budget.

Your budget is a continuously changing document. It’s not a set and forget. You need to adjust it every budgeting period. Of course, some expenses will always be the same, but things will change as your goals change and income changes. Take the time to reflect on your budget and make adjustments as needed as your life changes. As you reach your goals, your budget should be changing to reflect new goals that you have.

Remember: A budget allows you to gain control over your money, how you do it is completely personal.

Budgeting takes some experimenting and figuring out what works for you and your situation. I encourage you to try new things and figure out what works best for you. It should take time to figure out a system that works and that time spent is well spent in the long run. How do you budget on a variable income?

Money Management

Why You Need a Buffer When Zero Based Budgeting

Why You Need a Buffer When Zero Based BudgetingThis post may contain affiliate links. Check out my Disclosure Policy for more information.

We hear it all the time in the personal finance field, zero based budgeting. It’s an incredibly powerful tool and I know for me, it has been the tool to help me pay off $100k in student loans in 3 years.

If you don’t know what a zero based budget is, it basically means that your budget equals zero by the end of your budgeting period. Basically all money that has come in, then goes out by the end of that budgeting period.

I’m not saying you spend all your money by the end, but that you have sent your money to start working for you based on your goals. My long term goal is to reach financial freedom and my goal right now to get there is to pay off my student loans. This means that at the end of my budgeting period, I do monthly, all my extra money goes to my debt.

It takes some time to incorporate and I know a lot of people are scared to use this model of budgeting, which I totally get. I was nervous to since it means all my money I earned goes somewhere else by the end of my month.

I’ve been utilizing a zero based budget for 4 years now, and I made a mistake this month. I wasn’t anticipating my old student loan provider would pull a payment since my loans were paid in full by Earnest once I refinanced (Use my referral link to refinance and get $200!). However, out went $621 on a zero balance loan and caused me to overdraft.

I acknowledged the mistake and immediately started creating a plan so this doesn’t happen again. You see, I am in a unique situation where I live at my parent’s house while I pay off my debt. My bills are minimal because of this. I also kept a $500 buffer in my checking account and assumed it would be enough since my bills are so low.

However, the perfect storm brewed up in early September (checking account at exactly $500 since I’m a teacher and had used my entire summer sinking fund by then and a payment withdrawn on a zero balance student loan I wasn’t anticipating) causing my entire system to fall apart.

There are two ways you can prepare yourself for these types of things to happen. You can have a buffer in the account you use to pay all of your bills, like I have used. I would suggest having at least 1 pay period of expenses saved up, which is what I didn’t do.

Or, you can get to a position of living on last months income. I give so much credit to people that do this! I think it’s because I’m so angry at my debt for preventing me from reaching my goals sooner that I can’t let money just sit in my account. I need to send that to debt ASAP.

Basically what you would do is that you would save enough in your account that you eventually are at a point that you are living on the previous months income. It’s an incredible concept and tool, but I’m just not someone that has been able to implement this strategy.

Figure out what works for you, and get that zero based budget into action. I promise, it will change your financial life if done correctly. I’m happy to help you with this, just shoot me an email 🙂 How has zero based budgeting helped your financial life? I’d love to hear about it in the comments!