Organizing your life is more than sorting through “stuff.” It is also about taking control of your finances as well. Do you know how you are spending your money and on what? An organized budget will help lead to an organized financial life.
Budgeting is basically determining how much money you bring in and specifically where you are going to spend it. Notice I said, “Where you are going to spend it.” That’s correct you need to make the decision as to where you are going to spend your money. Now of course the first place your money is spent on are your fixed bills such as mortgage or rent, electricity, heat, and food … just to name a few. The initial budgeting process is the most challenging, but is well worth it. How would you begin?
First make a list of all those bills that come in every month that are fixed. Those would be categories like your mortgage/rent, insurances, electricity, heat, cable, telephone, and water. I total what I paid the prior year for each category and estimate what I will have to budget for the next year. I spread it out on an Excel sheet month by month. Of course, there are software programs such as Quicken to help you manage your finances. But I manage it on a simple Excel Sheet.
When a bill comes in, I record the amount I had to pay under what I have budgeted. This way I know if my expenses are increasing or decreasing. If my electric bill comes in way higher than it did the month in the prior year, then perhaps I need to look at what could have caused it. If there were no price increases in electricity, then perhaps I’m wasting electricity somewhere in the house.
The next area I add on this list are the items I spend money on but have a little more control over. This would be expenses such as auto gas, food and household items. They are considered variable expenses. I try to keep within a budget for gas but if my business clients are farther away than normal, then my gas expense will be higher. Food is something I don’t skimp on. I eat organic and “clean” as much as possible and do spend a hefty amount each month. My reasoning is, I could pay more for good healthy food now or pay in medical bills later.
Next I would make a decision on how much I will put each month into a savings account. So many times we let this area be at the bottom of the list. Then we find that there really isn’t money left to put into a savings account. This is not the wisest approach to take. It is hard and there can be issues in life that prevent you from saving. But it is something that should take a priority especially over entertainment and eating out.
Lastly, the next area of variable expenses in the budget would include items such as clothing, vacations, entertainment, eating out, etc. The amount you budget for this will be based on what you have left after paying your fixed and variable expenses and tucking some money away for savings.
A good way to get a handle on where your money is going is to keep a log for 30 days. Don’t make any changes. Just keep spending the way you have been. Once the 30 days are up, review the list and see if there are any areas you could cut back on. For example, I know individuals who stop daily to get a Starbucks coffee. They don’t purchase just a regular cup but one of those flavored ones. So they run about $4 each. Four dollars times 5 days a week is $20 a week. Multiply that times 48 weeks (we usually take 2 weeks vacation) totals up to $960 per year … on coffee! When you look at it from that perspective it sheds a whole new light on the issue. If you aren’t saving, then perhaps this is an area you could consider cutting back on.
So take some time and create your household budget. Do you need help organizing your bills and household papers? Then consider calling a Professional Organizer. We are trained to help create an organizational system that will meet your needs.
If you would like a copy of the Excel sheet I use for tracking my household budget, feel free to comment below and ask me for a copy. Provide me your email and I’ll be happy to send it along to you.
Happy Budget Organizing!
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