Hi there! Welcome to week two of the 60 Day Budgeting Challenge.
This week, I want to help you really understand your Financial Big Picture.
Last week, you figured out how much money you spent over the last 30 days. This is a good way to help figure out not only a dollar amount for how much money you spent, but also to figure out how you’re spending. All of this is important when we put together a monthly budget.
Today, though, I want you to look at three other pieces of your financial story.
1. How will you handle an emergency expense (like replacing a dishwasher, paying for an unexpected medical expense, or fixing something on your car that breaks)?
2. What expenses do you need (or want) to save for?
3. How much do you make?
Here is your homework for this week:
Start filling an emergency fund. If you already have one, woohoo! If you don’t have one, create a spending category in your budget for an emergency fund – and start putting some money in it each month until it’s full.
Not sure how much you need? This depends on your income, expenses and comfort level. Right now, we have $1,500 in ours. Eventually, we’ll have enough to cover three months of expenses. But while we chip away at our debt, I’m comfortable with a $1,500 buffer for emergency expenses.
I’ll talk more about emergency funds in a future email.
Determine what future expenses you need to prepare for – and also what future expenses you would like to prepare for (vacation house, anyone?). It’s important to have categories for these things in your budget, even if you aren’t funding them – or pulling money from them – every month.
Need some ideas, or want to make sure you’re not missing anything? Print out this list of expenses to get your ideas flowing.
It’s totally okay to buy new furniture or go on vacation when you’re budgeting. Having a budget means that you are controlling your money, and as long as you plan for these things, you’ll be fine. It’s a last-minute, spontaneous vacation or impulse buy at the furniture store that break the budget, and this is what you need to watch out for – and also why it’s so important to be thoughtful and thorough when you’re looking at upcoming expenses.
List out all of your projected expenses outside of your typical bills and living expenses. Include your “wants” in this list, too. You can prioritize and rearrange your budget as necessary each month to accommodate these categories, but it’s important to know what they are so you don’t have any surprises.
Know your income.
This should be pretty easy to dial in, but some of us might have an income that varies from month to month, and that can be tough. If that’s the case for you, average your last several month’s income to get a realistic idea of what a “normal” month looks like for you.
Write down your typical monthly income.
Use these monthly expenses and income printables to write down ALL of your expenses – the ones you came up with last week, and any projected expenses (or wants!) that you will come up with this week. You can also use this to record your income.
Although this will certainly do the trick and work as your budget, the real purpose of this exercise is to write down – in one place – everything you spend money on, will be spending money on, or want to spend money on. And once you have your income filled out, you’ll start to see a clearer Financial Big Picture of what your money really looks like and where you need to focus your priorities. Which will totally help you get that vacation house (says the girl who is dreaming of a lakefront cabin in Oregon, or maybe a seaside condo in California)!
You can download all the printables here.
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Next week, we’ll really pull this all together and tighten up an “official” budget – and then we’ll work on STICKING TO IT! 🙂
Here by accident? Hi! You’ve stumbled upon my 60 Day Budgeting Challenge. You can learn more here.