If I’ve learned anything about money, it’s that everyone’s financial story and status is different. Some people make more, some people make less. Some people have debt, some people don’t. Some people want bigger emergency funds, some people want more invested for retirement.
No matter where you fall on this spectrum, EVERYONE should have a budget. EVERYONE should have a plan for their money. EVERYONE should be intentional with their finances.
Most people are intentional with every other aspect of their lives. We intentionally set an alarm clock so we will wake up for work the next day. We intentionally go to the grocery store so we will have food to cook for our families. We intentionally invest time and effort into our relationships so they will continue to grow. So, why is it that we struggle with being intentional in using our money?
By having a plan for your money, you can set a goal and reach it. By making (and sticking to!) a budget, you can stop worrying about your money. And, my personal favorite, by following that plan you can give more freely and be a blessing to others!
You might have a general idea about how much is in your bank account. You might have a basic plan for your finances. You might know about how much you make each month. But maybe you don’t know the exact numbers.
In order to make any financial progress, or set and stick to a budget, you have to fix this. You should know exactly how much came in, exactly how much went out, and how much is in your account on any given day.
This is your starting point: know your number!
Are you ready?
Step 1: Figure out how much money you make.
Spend some time this week figuring out how much money has been coming in each month. You can look at just last month’s numbers, or the average of the past three month’s numbers. Whatever tickles your fancy. If you want the bare bones, just peek at last month’s income. If you’re a number crunching, self-proclaimed nerd (like me!) feel free to find the average from the last three months or so. However you decide to do it, find a number for your income, how much comes into your account. (And by number I mean a hard and fast number, not an idea of how much you think you bring in.)
Step 2: Figure out how much money you spend.
Open up those bank statements that come in the mail every month and are piling up on your kitchen counter. Or pull up your bank statements online. Most banks allow you to log onto their website to see real time updates on all of your accounts.
Take a look at all of the expenses you paid and all of the things you bought. Bills, food, gas, entertainment, clothes, car expenses, etc. Add it all up to find your outgo, how much was paid out.
Now, it is really easy to cheat on this and say how much you think you spent on a certain thing (like groceries or eating out!) or how much you would like to spend on these things. But you really need the exact number. Exactly how much did you spend on eating out? Groceries? Gas? Clothing? Fun/entertainment? Sometimes finding the exact number we spent on something the previous month is eye opening!
To find out your exact amounts, create a simple chart. On one side, write the category (groceries, gas, clothing, etc.). On the other side of the chart, add the totals for that category. (Or the averages if you are using the past three month’s expenses.) For example, for “eating out” I would scroll through my bank statement, adding up each transaction from restaurants and fast food places. Then I would add that total to my simple little chart.
The first time I did this it was not pretty. Fair warning: You WILL be shocked at some of your totals. Please don’t just guess. Spend a few minutes and figure out your numbers. I promise it will be great motivation for you going forward!
Before we can really move forward, we have to know exactly where we are starting out. And chances are, you clicked on this post because you aren’t happy with where your budget is right now. You know you want to change!
Don’t be too hard on yourself. We can’t go backwards and change what we spent last month. BUT we can change what we spend going forward. Sometimes my biggest motivation in sticking to my budget is looking back and seeing how much money I let slip through my fingers!
Step 3: Look for some common spending categories.
Glance at all of your expenses, and try to label them as different categories. For example, in our family, some of our spending categories are groceries, gas, fun money, family outings, household things, bills, savings, etc. Maybe you live in the city and ride the subway to work every day. Include that as a category. Maybe you are single and don’t have kids. You would probably do without a family outings category, but might want more for eating out or entertainment.
Just look at the big picture! What would be some categories that most of your expenses might fall under? Start a list and hold on to it. We will come back to this next post.
Step 4: Get in the habit of checking your bank account every day.
This literally takes 45 seconds total. I’ve gotten in the habit of checking my account balance every morning when I get started with my day.
By checking my account every morning, I know right away if an unexpected expense leaves my account less than I thought it should be. It also gives me peace of mind in knowing what is there so I can be a better steward of what God has entrusted to our family. Those 45 seconds are such a great investment.
The other day, my husband sent me a quick text letting me know a friend of ours from college was going to Uganda for a missions trip. He had posted on social media that he and his wife were close to raising all of their money. When he said he really wanted to cover the rest of their amount, I had no reservations in saying yes!
By knowing the amount in our account, I knew our bills would be paid, we had enough to give, and I was able to intentionally steward our resources to help others. These people in turn were going to a foreign country to spread the gospel.
If I wasn’t in the habit of being intentional with our finances, we probably would have overspent in every budget category and would have had nothing left to sow into this unexpected ministry opportunity. The peace of mind I have in knowing I can say yes to giving to others is priceless! And so freeing!
So, how much was deposited into your account? How much went out – in bills, gas, food, clothing, fun and entertainment? Do you know the amount still in your bank account?
Once you have your numbers, make sure to stop by our next post, where we will take a deeper look at our “outgo” and use our spending categories to create our budget.
For more on this series: