Welcome back to the show. You’re listening to Episode 146 of Live Free Creative podcast. I’m your host Miranda Anderson. I am back in my home studio, and by home studio I mean the office that I lease that’s about five minutes from home because I don’t in fact have a home studio yet.
Segment: Life Lately
New Garage Space
I say yet, because we have a little bit of an idea that hopefully will turn into something over the next little while. We might be adding a detached garage onto our property.
We’ve met with not one, not two, not three, but four contractors. Turns out hiring a good contractor can be tricky. I will mention while I’m saying that, that I do have a great episode all about hiring a good contractor. And I’m using some of those same skills that I shared with you.
It was way back. I think it’s one of the first 10 or 12 episodes. I will link it in the show notes. If you are working on any home renovation things, and you need to hire a good contractor, that’s something that we are working on over here as well.
I would love to have a space to keep what we’ve turned our clubhouse into a shed for the kids to hang out, to have just an added bonus space right now.
Actually my youngest sister just graduated from college. She’s staying with us for the summer. We are thrilled. We love aunt Mattie and we converted the clubhouse into a studio apartment while she’s here. Of course the plumbing is all inside, but having a nice place to hang out and sleep outside of our own premises is perfect for her. It’s really fun.
A detached garage would just give us that bonus space that we already have in the clubhouse, as well as some added storage/bike/car space. Here in the city of Richmond, right where we live in our neighborhood, it’s really unusual to have a garage.
Most houses. I mean, I’d say 99% of houses, don’t have an attached garage and maybe about five or 10% have a detached garage that was added later. So it’s not totally unusual. Something that we’re working on. That is where I would eventually like to move this office space that I have right now into the future, yet undesigned, yet uncontracted, detached garage space in my own property.
But in the meantime, I’m thrilled to be here to have an office, to have a microphone. I take it on the road with me when I travel, as you found out last week. And I also love just sitting down in my own little space and chatting with you.
All of that to say today’s episode is about the basics of budgeting. It’s nothing to do with what I was just talking about. I did a little mini Life Lately segment without even telling you I was going to.
New Feline Companions
While I’m on my Life Lately non-segment, because I didn’t even give you the intro music, I just have to spill that we got our kittens. Do you remember a couple of months ago on the show I mentioned we’re just kind of toying around with the idea of getting kittens? Well, fast forward to last week, when they showed up post spay and neuter appointment, 10 weeks old, the fluffiest most lovely little gray cats.
I think that the color–I want to say they are like a blue color. They’re actually gray. Olive, the female, the sister, is a lighter gray color. Simon, the little brother or big brother. They were born in the same litter. I’m not sure who came first. Simon is a little bit darker gray.
Both of them are in the vein of what I think cat and dog breeders would say would be like a blue or a lilac. And they’re gorgeous. They’re so cute. Little rescues. Their mama was a rescue from Arkansas that was transferred to the local Richmond animal care and control center.
Upon adopting or rescuing the mom from Arkansas, they discovered that she was pregnant and she was able to have her babies in foster care here. The kindest foster mama took care of them. We were able to go visit them several times.
And of course you introduce yourself and your kids to like three week old kittens, your heartstrings will be tugged and tied into solid knots. We fell deeply in love with them, visited them several times in foster care, decided that they were absolutely it for us.
They are now part of our family and we’re thrilled. They’re wonderful. I want to thank everyone who sent me advice and ideas. I feel like I’ve got all the coolest kitten stuff that we needed to get them set up. We’re just loving them. They’ve been so fun.
And a lot of people have been curious about the introduction to Quincy. We’re doing kind of a slow tiered introduction right now. The cats just live in one room because they’re changing environments right now.
So they’re just in Milo’s room. We’re going to slowly start to move them where they have the downstairs that they can get to know, and we’ll keep Quincy crated while they’re exploring, and then we’ll let her out and put them away and then do some introductions where she’s leashed or in her place.
And as they get to know each other and feel comfortable and happy with each other, then we’ll slowly go to a normal, full family interaction, where the kittens have run of the house. And Quincy of course, has always had run out of the house.
And I think in this way, we will be able to combine our families, the new brother and sister, little babies, Simon and Olive, and our current canine companion, Quincy Jean. Very very exciting.
Well, since I’ve already given you the life lately segment, I’m going to give you the music and then we’ll dive straight into the basics of budget.
Main Topic: Basics of Budgeting
I have had many requests for me to share a little bit more about money mindset and about what our family does for budgeting, which I know varies so widely family-to-family, culture-to-culture.
To give you a little background on where I come into the budgeting world, I was born daughter of a budgeter. My father is a business owner. He grew up in a very thrifty family.
My grandfather, my father’s father, his job was to help the industry that he worked for become even more efficient. He was an efficiency expert. So he would look at the overhead and the bottom line and try to reduce the overhead and try to increase the bottom line for the company.
So budgeting has been a piece of my life since I was young. When I was 12 years old, my dad took me to First Security Bank. I don’t even think that is a bank anymore. But he took me to First Security Bank and helped me sign up for my very first checking account.
When I was twelve-years-old, debit cards didn’t yet exist. I don’t think so. I just had a checking account. He gave me a monthly allowance. And with that money, I needed to buy all of my own clothes, all of my own social activities, school lunches. And at the end of the month, in order to receive my next month’s allowance, I had to bring my dad a balanced budget.
So my checkbook register, I needed to have recorded all of my purchases and deducted them from the total. Anytime I made a deposit–because at the same time I was working as a babysitter and so I would make additional money that I could deposit into the bank–I would include that on my register.
I was always keeping track of money coming in money, going out. And I reported that to him in a little quick meeting each month, where he would go over it with me. And then if everything balanced out and I still had a positive balance at the end of the month, he would give me my next month allowance. This was my introduction to the world of money.
I feel so, so blessed. At the time, it was super annoying sometimes. I mean, it was really great to have my own money where this allowance that my dad had given me, it was a little bit finicky.
I definitely had a lot of overdraft challenges during those first few years as I was getting the hang of it, or I would, you know, go a couple of days without recording anything down. And then I’d realize that I had maybe spent more than I had, and I had to pay fees to the bank and all of these things.
These are things that I learned in a very low impact environment because I was 12, 13, 14, 15. There was no true impact. I had a home. I had groceries in the pantry. I had my lessons paid for. I had transportation.
And so all of these little hiccups within my own ability to spend, save, budget, even overdraw and go into debt and need to recoup from that were really done in a time of my life that I could learn a lot of important lessons.
That is not to say that it has saved me completely from having really hard financial lessons that I’ve had to learn as an adult, as a married person, as a mom, it was really nice to become somewhat, basically financially literate as a child.
The way that I learned to think about keeping track of my money and helping to determine where my money went in advance of spending. It was something that has been a really important lesson and helped form a foundation of financial literacy and financial security that I think otherwise would be a lot harder.
I’ve mentioned in other shows about my deep love of travel that was cultivated young. From the time I was a teenager, I knew that I wanted to spend more of my money on traveling than on clothes, for example. And so I would set aside money each month from my babysitting money, from my allowance that I could have otherwise spent on going to the movies or in buying new shoes, I put money away into a travel fund, my own personal travel fund.
And with that money, I was able to travel a lot as a teenager. I went on some school sponsored trips. I was able to travel with my friends for my senior trip to Newport beach. I spent 10 days in Costa Rica, backpacking with some friends and cleaned out my account with the flights and the hostels and the food and the transportation, but came back just so in love with the experience that I had had.
After living in Argentina and serving as a proselyting missionary there for a year and a half, I decided that I wanted to go do some humanitarian work in Bolivia and Peru. And so I saved up some money for that. I even held a fundraiser in order to contribute to the funds, to be able to go and serve.
We built a water collection system in the highlands of Bolivia and it was just really fun to be able to see the way that I could use my money on the things that mattered most to me, and that I could make those decisions to spend less in some areas in order to be really fulfilled in others.
Abundant Money Mindset
One of the things that I recognized from early, and this is something that’s really fundamental to my own money mindset. And I’m curious how you feel about this generally.
I did an episode about money a couple of years ago. I will make sure that’s linked in the show notes. It’s called money mindset or how to have enough money. I think the show is called how to have enough money and.
The essence of that episode is that the two ways to have enough money are to spend less or to earn more. And so I talk in the episode about some ways to earn more and some ways to think about spending less. A big foundational piece of my own personal money mindset is that money is something that can always be earned, that it’s always available.
I have had jobs of all different kinds. I have a whole segment called odd jobs. I’ve learned that I can earn money through lots of different things. I can earn it quickly by doing odd jobs around the neighborhood, or by babysitting, or by doing a quick sewing project, by using direct skills in order to make money.
I also know that I can get a job in food service or in outdoor entertainment and recreation. I’ve had jobs kind of all over the board from the time I was really little. And so I recognize that while I don’t always have the amount of cashflow coming in that I have hoped for in my life, that money is always readily available through any number of dynamic means.
I know now as an adult, especially in our current environment, that that perspective is a very privileged perspective. I have to acknowledge my privilege that the worst off I’ve ever been has never been that bad. That I’ve always been able to have the fallback of family and friends that I have always been able to pay my bills, even if it hurt for a while.
I also know that getting a job and holding a job and keeping a job is really, really difficult for some people and in some circumstances. And I’m really lucky that it hasn’t ever been that difficult for me. I’ve been able to find jobs when I needed them, even if they weren’t exactly what I wanted to do.
Sometimes there were things that I did in order to just pay the bills, just make things happen. In order to have the step that I needed to get to where I really wanted to be or do what I really wanted to do. I think in general though, having an abundance mindset around the idea of money has been really helpful.
Thinking of money as a renewable resource has enabled me to recognize it not as something that you either have or don’t have, but as something that continues to flow in and out of our lives, depending on different circumstances and choices.
Spend Less Than You Earn
Now, as far as the basics of budgeting, One of the first things that I want to start with is something that I learned a long time ago. And it’s probably something that most of you have heard.
The real key to budgeting is to spend less than you earn. The real key to financial security and success is to always live within your means.
Now, I’m going to start there as a really solid baseline financial principle, that it would be kind of hard to argue against.
I also want to acknowledge that there is a whole culture of shame around the idea of debt that I’ve worked really hard as an adult to let go of. I grew up in a culture that, for better or worse, taught me that there were only a very few number of instances where acquiring debt was acceptable.
One of those was for education and another was to buy a house. Anything other than that was not really a moral grounds for debt.
And for one reason or another in my own experience, there have been other reasons, thoughtful reasons sometimes, and not so thoughtful reasons sometimes, where debt became part of my experience. And I can tell you that the number on the credit card bill never mattered as much as the way that I thought about it, the way that I felt about it.
I’ve been in debt. Consumer debt that crushed my soul and made my life really hard day-to-day, such that I felt so burdened and felt like things were really hard. And I’ve been in debt that felt like a positive investment in my lifestyle, in my family life, in my ability to move forward in the ways that I wanted to and with the assurance and the confidence that I was also capable of taking care of and ethically and responsibly paying off that debt over time.
I think I flipped a little bit, especially as a business owner, from thinking that debt always equal shame and guilt, and that you did something wrong and you should have done something better or differently, to thinking that the ability to have credit is a privilege it’s awesome to be able to have an extra added ability to spend money for things that are needed, that you deem necessary at the times that you deem them necessary.
And that is a very personal choice. That’s an individual decision or a family decision. I definitely don’t want to condone all types of consumer spending. I also think it’s irresponsible to condemn all types of debt, except for the few–whoever they are–that says is acceptable.
I think that personal finances are personal for a reason, because what we want from our lives and for our lives is different. Every single one of us will have different ideas about what we want our lifestyle to look like.
Maybe this little chat about debt is surprising to some of you because I very much believe in less as more, I believe in simplifying and reducing the amount of payments that you have to make for things in maybe having one, when you could want to have five.
So, no, I’m not just saying, Oh, go spend all the money on all the things all the time.
At the same time, if you do find yourself in a situation where you are in debt, for whatever reason, it doesn’t make it any better to feel terrible about it. It doesn’t make it any better to beat yourself up about it and think that you should have done something differently.
It is definitely okay to say that where you are in your financial journey as an individual, as a family, is where you are supposed to be right now, because you’re there. And find some abundance in the present, how great it was that you were able to do all of the things that you did, or buy the things you bought, or acquire the line of credit that you had in order to XYZ and enjoy those things. Enjoy that renovation.
In one case in my life I went into debt to have a baby. I thought that one of my two insurances that I carried at the time would cover it. I assumed that one of the two would cover at least a part of the delivery and that didn’t end up to be the case. And so $12,000 later, this huge, unexpected expense that I would never in a million years have traded.
I would never have said, I don’t want the baby anymore because I want to avoid the debt. That’s an extreme example, but be kind to yourself when it comes to your finances, they can be stressful and hard enough without you adding to that, thinking that you’re not doing it right.
Everyone starts where they are and learns and grows and chooses what feels right to them as they progress.
Income and Expenses
So let me move into this next little phase of the basics of budgeting. There are lots of different systems of budgeting. We’ve used a ton. We’ve used lots of different apps and programs we have used. A ton of different Excel spreadsheets.
It’s actually really funny to go back and look at some of those. When Dave and I were first married, we got married, we went on our honeymoon. We came home and Dave had put together a PowerPoint presentation of our bank accounts, our combined worth our rent payment, our debts.
And we had some goals that we put into place from the beginning of how we were going to pay our rent every month and eat while I was a student and while he was working as a valet driver and how we were going to make this work.
From that very first budget, the foundation has been the same, determine the cost of our essentials, determine our income. If there’s a surplus, choose what to do with the extra. And if there’s a balance, determine how we’re going to make up the difference.
At its very core, this is what budgeting is to me to determine your clear, essential payments or costs of living, determine your income and figure out do you have enough, more than enough, or not quite enough? And what are you going to do about it?
Separate Fixed and Variable Expenses
We in our family right now, like to break our essential lifestyle up into two different categories. We have our basics fixed category, which are fixed monthly expenses that include mortgage or rent, car payments, or insurance. Maybe your Netflix fees or your Hulu. I know we have Netflix, Hulu, Amazon plus, and Disney plus happening right now.
I think we pay more for TV entertainment than we would for traditional cable, but we use it and we love it. And that’s one of the traces that we make for our monthly basic essentials, which I use the term essentials very loosely, obviously, because if all was said and done, we could cut all of those cables and be totally fine. We’d figure it out.
In the meantime, because we are able to, and we have made that choice, we pay for them. We include our phones in a basic fixed cost. All of our kids’ lessons, piano lessons, swimming lessons, those types of things we put into our fixed because the monthly cost stays the same every month.
Our utilities actually doesn’t stay the same every month. It changes a tiny bit. And so we use the highest possible number that we’ve seen as our placeholder for that in the utilities and the fixed budget. And then if it happens to be less than that’s great, it just as bonus extra money.
Our monthly variable costs go into a different category because all of our own basic fixed costs we pay in an auto pay system on the spreadsheet, we can see what those numbers are and then those all are paid without us thinking about it.
Our variable costs are things that we can’t determine exactly what the number will look like every month. These are things like groceries, gas, eating out date nights, clothes.
If we need clothes, I only buy clothes for my family twice a year. I’ve talked about that before those budgets. The money for clothes comes out of our variable expenses because they’re not a fixed monthly cost. Vacations as well.
All of our fixed basics go into one main account and then go out of that account.
All of our variable basics, we have sort of come up with a round number of what makes sense, what feels comfortable, but isn’t super overdoing it for our variable expenses. Again, not knowing exactly what the costs might be, but having an average of what our groceries are, especially with our minimal meal plan, we have a basic idea of how much we spend on groceries each week.
I think Dave and I each fill up our cars with gas once every two weeks. We don’t drive a whole lot where we live right now. And so unless we’re on a road trip or a vacation it’s about that. So we can, we have kind of a basic idea and a couple of times over the last few years.
Because of lifestyle changes, maybe the kids getting bigger, our grocery budget growing a little bit, we have determined that that variable budget needed to increase a little bit. Like if I kept feeling like at the end of the month, I was kind of crunched for groceries, then maybe we would look at it and say, you know, maybe we need to increase this a little bit.
One of my favorite parts of our current budget is that all of our variable basics, all of the money that we determined for those, is transferred once a week into a totally separate bank account.
I mentioned on Instagram that we used to use Simple for this because it’s so easy to add additional free accounts from that one app and now it just changed to BBVA. And so we’re going to have to see if everything has translated okay.
So far, so good. But I really liked the simplicity of Simple. With BBVA we’ll find out.
What’s nice about that is that all of those variable expenses, the budget for that gets transferred once a week. And then we can determine we can put it into different spots. So I buy groceries and gas out of that one account, I can also move money into a vacation account or a gift account.
I can move it into a personal account for myself. What is so beautiful about having a variable basics account that feels like it’s still a budget where we’re tracking it and we’re paying attention to it, but we’re not paying attention like on every single minute swipe of the card for a McDonald’s soda.
Instead we determine the variable as a whole number that gets transferred out of our main account into this spending account. And then we know that that money is already set aside. All of our other bills are paid and this money is meant for living for date night, for eating out with the kids, for buying gifts for people, for buying plants, for myself.
The goal isn’t to spend the least amount of money possible. The goal is to live the life that we want to live. And when I have money already set aside in this separate bank account for things like buying groceries, and eating out, and going on date night, I get to make those determinations or Dave, we share this account, on a regular basis, like week to week.
And it’s also really nice that it’s weekly, that the budget isn’t like for the whole month, that each week, this money gets transferred and renewed. And I go spend $200-ish on groceries, and then we have money for a date night.
And some weeks, if I have other costs, maybe we want to take the kids to the zoo. If that is a higher expense than normal, I can look at that and say, Oh, well, then that means that we’ll just spend a little less on date night.
Some weeks, we want to have a really fancy fun date night. And so then I’ll know that most of our family activities that week are going to be cheap or free. I can make these sort of easy decisions, but know that that money is not meant to all be saved. That is the money we’ve already set aside for spending. This is lifestyle money, and it’s so fun to not have it come out of any main account.
Maybe it’s just a mental thing that it’s already set aside for spending. This is the money we are going to spend on doing the things and eating and enjoying life. In all of its day to day, week to week, ups and downs, sometimes we determined that we want to save ahead for a bigger cost item or experience like a big family trip, or for example, Christmas tends to be a little bit more of an expensive time.
We don’t do a whole lot of physical Christmas gifts, but we usually like to take our kids on a trip or do adventures and definitely have a lot of Christmas experiences. And that all is more than our typical weekly expense budget. So we can add these monthly costs to add up over time, to save for the longterm item, and put those savings into our fixed monthly budget.
So rather than relying on me remembering that I want to put money away every week, we can look at our budget and say in six months, we want to have $4,000 saved up for a family vacation. That means we need to put about $670 away each month. And how do we do that?
Is that money that we can not put into savings each month? Is it money that we can play around with some of our other expenses? Maybe then at that point we say, you know, we really don’t need Hulu, or we are paying for an extra phone service for the iPad. Or does it already fit and we just want to shift some things so that that money is going directly into a travel fund savings account.
Being able to make some of those decisions ahead of time and then make our money move to the places where we want it to go for some longer term expenses is really helpful.
It’s possible to live a really beautiful, fun, full, abundant feeling life even when you wish you are making more money, or even when you have debts that need to be paid.
I think a balanced approach is really helpful where you’re able to set money aside each week that you know, that you’re going to spend so you don’t have to feel bad about spending it. You know that that money is going to go for your weekly enrichment activities and to have money set aside that invisibly pays for things, pays down debt if you need to, covers all of your basics and essentials.
And then if there’s money still left, putting that a way into general savings.
I think it’s really fun to put it away into specific savings, whether a travel fund or a retirement fund or a college fund where it has a name on it. And you think I am working towards this future goal rather than just a general fund.
Freedom Now and Freedom Later
It’s always good to save all of the money. Having a goal, a future focused goal, as well as a current focused goal may be the best way to balance a budget. That’s what a balanced budget feels like to me.
The goal is to live a life that we want and that we love while at the same time preparing ourselves and setting ourselves up for a future that we love.
I know that there are some super budget minded gurus who have taught–and I won’t argue that this principle won’t save you money–that you should save every single cent. That you should get rid of all your debt, including your school loans, including your mortgage. You should be completely 100% debt free. And the way to do that is to take a second and a third job to not spend any money, eating out, to not spend any money going on activities or going to museums. To live in a completely finance free, investment free life so that you can then later have all of this freedom.
There are people who are super invested in this 100% debt-free, “I will save every cent that I have”, and it’s not worth it to go out to eat. It’s not worth it to go travel. It’s not worth it to spend any extra on anything extra. And if you align with that, then that’s wonderful. And I say, go for it.
And if you don’t align with that, which I personally don’t. I think that my perfect financial freedom is in the middle. It’s freedom now. And freedom later.
And maybe one comes a little bit at the expense of the other. And if that is the choice that I have to make, then I’d probably opt for a little bit more freedom now, just a little bit more freedom now, because I don’t know what my later is going to look like.
I don’t know if I’ll make it to later. In the least morbid way possible, I want to create memories right now and set myself up for success in the future. And one way I can do that is by being really clear about what matters to me and making sure that my investment, that my finances are flowing into just those areas that I cut out the non-essentials, but using the term essential personally.
This goes back to all of the principles that I’ve ever shared about minimalism and about living an intentional life. What matters most to you? What do you and your family value the most? Make sure that you’re spending your finances on those things.
And if you find areas of your life. Maybe some of them are recreational activities. Maybe some of them are some of your kids’ activities that they don’t love or that you don’t love investing that much in. Maybe some of them are the types of places that you shop for clothes that feel really good to keep up with the Joneses, but don’t really feel good on a regular basis on your budget, but it’s not that important to you.
Maybe you find the things that matter the very most to you and invest in those. And then don’t even think about buying any of the other things or investing in the other things.
Some of the ways that we’re able to travel as often as we have in the past is because I’m not spending money regularly on clothes or shoes. I do a couple times a year. We buy a few things that we love. We all have capsule wardrobes, and I don’t have a monthly clothing budget. I don’t have a regular rotating door of the latest trendy items and that’s okay.
It’s so fun for people who love that and want to spend their money there. And it’s so fun for me and my two new t-shirts a year or my old favorite clothes to pack those things up and go on a weekend vacation with the same finances.
For some people, they can do it all. For some people, they can save, they can pay off debt, they can buy all of the fancy clothes and they can also travel and they can also go out to eat.
And if you’re not one of those people, budgeting will look like investing in the things that matter most to you and eliminating all of the other non-essentials.
Budgeting can look like having the confidence to be updated regularly on what you’re spending your money on, on where it’s going so that you can inform your choices about it.
I had a friend several years ago, maybe 10 years ago, who mentioned that she didn’t have a budget. She never really looked at the bank. I mean, once in a while, and she’d say, I just kind of hope, like I crossed my fingers and hope and sometimes we will say, maybe we should not spend as much right now. And then sometimes we spend a little more.
But she didn’t have any sort of a budget, had no idea where money was going. They had no real idea how much they were trying to spend or trying to save.
I think part of the power of money is you being in charge of it, of you, whether it’s the amount that you wish you had or not.
It’s very empowering and builds a lot of positive energy for you to have the confidence, to know what’s coming in or not coming in to know where it’s going out, how it’s being used and to be able to value it.
Do you like the way that it’s working for you?
Do you like the things that your money is being spent on?
Are there other thoughtful or intentional ways that you want to use it?
What are your big dreams and goals?
What are the things that you hope for in the future?
What are the things you hope for this year?
What are the things you hope for this month?
What are the things you hope for this week?
How are you using all of that positive energy?
The value of the money that comes into your life through whatever means you have available to you in order to live the life that you and your family want.
One of my goals as a mom, I think because of a lot of the financial instruction that I received from my dad as a youngster is for my kids to also be financially literate.
We try to give them lots of opportunities to interact with money, to earn money on a regular basis. My kids actually don’t receive any sort of an allowance, but they do have lots of opportunities to make money. They spend money. They save money. Both of my little boys have debit cards and debit card accounts where they can put money aside.
Actually, Milo has invested some of his money recently in the stock market. And Dave helps him understand what that looks like and helps them track it over time. That’s a whole different one than I am not familiar with myself, but it’s been really fun for them to look at and learn together.
Money Equals Energy and Freedom
Money equals energy and freedom. Money doesn’t have to feel stressful or frustrating or overwhelming.
Starting out for yourself or your family, if you don’t yet have any sort of a budget, even just starting to look at those bank statements or to look online at the app and to see where’s your money going, what is it being used on? Are those the places that you would want it to go?
If you wrote yourself a list of like your top five. The top five things that you want your money to be used on and compare that, overlay that, with your actual bank statement, are you spending on the things that matter most to you, on the things that enrich your lifestyle and making adjustments accordingly?
I need to mention the app. You Need A Budget or YNAB. It’s one of the most intuitive budgeting apps that I’ve seen. And it’s really helpful because it’s not a pushy app and you don’t need to know a whole lot about how money works in order to have it be useful.
It has a lot of really great tools like being able to analyze the categories of your spending, being able to make goals for paying off debt, saving for particular items or categories all within the app itself. It’s a paid app, but I think it has a 30 day free trial. And so if you just, if you don’t know where to start and you’d like to start with something, you could give You Need A Budget a try. I know lots and lots of people just absolutely love it.
I have used it not as like our full-time budgeting system, because we have a system that works really well for us. That’s just our kind of our own intuitive system. But following You Need A Budget as far as doing checkups and getting clear on where some of those regular spending categories are happening is really helpful.
So this is not sponsored by them at all. Just mentioning it because I know a lot of people find it a super helpful resource when they’re getting started with budgeting.
Basics of Budgeting Recap
So just to give you a quick overview of the episode, I’ve kind of gone meandered through a lot of different money things, but there’s a couple of things I just want to recap.
One is that there is always more money to be earned if you need or want to increase your income. Money is a renewable resource. It is available to you if you are looking for it. And there’s lots of different ways, especially if you’re not super duper picky. Like if you need money now, and you’re not super picky, there are lots of different ways to earn it and to enjoy it while you earn it.
There are always two ways to have enough money. One is to spend less so that your lifestyle doesn’t outpay your income. One is to earn more so that your income catches up with your lifestyle and goals. Those are the two ways to have enough money.
Debt is not inherently wrong or bad. In fact, it can be a huge privilege and a huge blessing if you need it at different times in your life. If you have some struggles around the emotional resistance to the idea of debt, especially if you are currently in debt and it’s causing you a lot of emotional grief, I want to invite you to try to flip the script a little bit and consider how awesome the credit is that it was available to you when you used it. And what a blessing of abundance that was in your life. And to try to believe in your ability to come out on top.
In order to create a budget, the basics are the same, determine your income, determine your cost of living, and you will see whether you have a surplus or a balance. If you have a surplus, you can decide what you want to do with it, where, what you want to save for where you want to put it. If you have a balance, then you either need to decide to spend less in your lifestyle or decide how you’re going to earn more.
In our budget, our fixed expenses come right out of automatic bill pay out of our main bank account.
We use a basics variable expense that transfers as a whole number each week from that fixed account into the variable account. And then I–it’s primarily me, but Dave and I–spend that money on clothes, groceries, gas, eating out, date night activities.
So I should mention that on our fixed account, on that bill pay that variable number is entered as a fixed expense. So that’s the beauty of it that it’s not like all the minutiae in the main account. That whole number is like, that’s our variable line item. And it goes into this other account and then it can be nickled and dimed as the days of the week passed by. I wanted to recap that.
One great way to save for bigger expenses is to add those as a monthly break them down by the amount of time that you have and add those in as monthly fixed expenses where it just deposits directly into a goal savings account.
I just want to finish by reminding you that I believe that the goal isn’t to spend the least amount of money possible in our lives, or to earn the most amount of money possible.
I believe that the goal is to live a life that we love while also preparing for a future that we love.
I want to finish by letting you know that I really truly believe that we have everything that we need right now in order to be happy. It’s sometimes hard to see that, but especially as we look into our own personal and family finances and start to think about budgeting, especially if it’s not something that you’ve done before, you can really quickly and easily get into a scarcity mindset or a place of feeling of lack.
So heading into any talk of money with a firm belief in your current abundance is really helpful. We have enough, we have everything that we need right now. A beautiful life is possible today. Even as we work and progress, paying attention to our budget can be a place where we feel empowered and free.
And that is my hope for you.
Thank you so much for tuning in this week to the basics of budgeting. I hope that there are one or two elements or ideas shared that will help you either in your mindset, or if you want to try to apply some of the principles that I shared.
If you want to try your hand at having a fixed budget and a variable budget that are a little bit different and that your accounts are set up a little bit different friendly, go for it.
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Have a wonderful week until we meet again.