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Today on the podcast, I am going to talk about my top 10 budgeting tips. So whether inflation has your budget outta whack or Christmas, it tends to go a little overboard, things like that, and you're looking to get back on track. For 2024 and get your budget under control. Today, I'm gonna hit on my top 10 budgeting tips to get you started and there will also be a link in the show notes if you would like to download some of my budget templates as well.
So tip number one, do an assessment of your spending for the last few months. So you need to know where your money has been going. Are you spending more than your income? Are you creating debt? Are you spending on things [00:01:00] you don't need? Especially subscriptions, multiple people in the house might have a Netflix account, things like that.
Do You think you spend 600 on food, but it's really a thousand dollars? So knowing exactly where your money is currently going is crucial before you start making a budget, because your new budget may be completely unrealistic if you're not in tune with your actual spending. And it will also help give you focus of things you need to stop spending on when you're making your budget.
Tip number two. So to create your budget, you need to assign a purpose for every dollar of your income. So your income minus your expenses should equal zero in your budget. We're gonna assign a purpose for every dollar, so if it's negative. That means you're going into debt each month putting stuff on their credit card and letting it build up.
And if there is money that is unassigned, then [00:02:00] it doesn't have a purpose. If you have a monthly salary, it's pretty straightforward to know what your after tax income is, to begin your budget. However, if you have an irregular income, such as a commission-based pay plan, then you want to plan for the worst to cover your essentials and then also have a plan for any additional income earned. If you are paid weekly, you want to create your monthly budget off four weeks of income. You will have a few months with an additional week of income and you will go ahead and make a plan to put that money maybe towards extra savings or debt, pay down, a sinking fund, something like that, but have a purpose for those few extra weeks when you have five weeks in the month.
Tip number three, you need to prioritize the necessities. It's often called the four walls, the categories of home, [00:03:00] transportation, food, and utilities. These are the things that are essential to survival. So note that food can be both an essential like groceries and a non-essential, like eating out, getting takeout, things like that.
So the non-essential part of food is not in the four walls. So we need to remember that. And once you prioritize those four walls and you have them covered, then you start prioritizing things like debt, pay down savings. But then you also need to create money for some discretionary and some other things in your budgets that need to be covered.
Tip number four, know if your categories are on track with guidelines. So historically speaking, total home expenses should be about 25% of the budget, and that's including, your mortgage or your rent, property, taxes, insurance, that kind of stuff. Over 30%, then that category has historically [00:04:00] been viewed as a little heavy in comparison to income.
However, with the cost of living over the last few years, that number is getting to where 30% can be a little more realistic, but getting up to 35 to 40% is getting a little high for you to be able to make everything else work. Transportation should be in the 10 to 15%. If you have a car payment, that percentage could be higher, which means you're gonna need to bring another category down.
If you have a car payment that's more car than you probably need, then it's gonna get that one outta whack as well. Food is in the 10 to 15% range. That includes if you are budgeting, maybe eating out a few times a month, not every day or every night, but you know, it's nice to go out to dinner with the fam.
Utilities around 5%. And they've, I know in some areas they're kind of, they're higher. So knowing these percentages and ones you can get down because you're higher in others [00:05:00] is really important to look at and compare. So your debt pay down and savings should really be about 15%. And if giving is a priority to you, the, the good old 10%.
Other minor categories that go into your budget, your personal expenses. And any kind of, expenses, other insurance, maybe you have a term life insurance policy, maybe you have some healthcare expenses, you have a high copay or something like that. So one thing to think about is if you have other large expenses, like you have to completely buy your own health insurance or you have expensive daycare, things like that.
These items could take a take up a large percentage of your budgets and the other categories you're going to need to give.
Tip number five, be on the same page with your spouse. So do your budget together, review it together. Be honest about your spending. [00:06:00] money can cause a lot of marital issues. Don't let it. This is a place where if you saw my episode about joint checking accounts, having those separate little personal accounts for that little bit of discretionary, may help your marriage.
And there may be a lifestyle change getting on a budget together. So give each other some grace as you walk through this together and figure things out. If you are single, I really encourage you to get a friend to help hold you accountable to your budget. Make sure it's a responsible friend, and that will also support your spending choices and maybe not going out as often as you're used to.
Tip number six, review your spending weekly to keep your budget on track. So adjust, when you're doing that weekly, it gives you, the ability, the flexibility to adjust for any unexpected expenses immediately. So your total budget for the month doesn't end up going over. [00:07:00] Your budget is going to change.
From month to month. It's not static. It's not the crockpot. Set it and forget it. So plan for the big expenses at the beginning of the month and get them checked off the list.
Tip number seven, food is a common category to overspend, so. I know I beat meal planning, like, like the dead horse, but, meal planning can really make or break your budget.
So make a meal plan, eat at home, and eliminate food waste. I've got some other podcasts and blogs that I've linked in the show notes if you want some more information on how you go about making a meal plan. And it not only saves you money, it also creates less stressful evenings. So if you're going to eat out some, be sure to add that to your budget so you don't ignore that expense.
But truly try to make a meal plan that covers your dinners for the week, pack in [00:08:00] the lunch boxes, all of that kind of stuff. And not only does it save money, but it really does lower the stress level. Especially if you have a lot of, young kids and things like that, or you get home from work late, it can be a game changer.
So tip number eight, plan for quarterly and annual expenses in your monthly budget. Don't let those, big expenses creep up on you and put you into credit card debt. You know they're coming, they're not an emergency, so plan for 'em. if you know you're gonna maybe, have to do some major home repairs in the next year or two, go ahead and save for them in the monthly budget.
Make what's called a little sinking fund and put it aside so that it's there when you need it, and if you get a tax refund. Make a plan for that money before you get it. Go ahead and designate it for debt, pay down savings, the college, plan, savings plan, whatever, but don't use it [00:09:00] for a shopping spree.
And tip number nine, if you have credit t card debt, cut them up, prioritize paying off the debt and only use cash or a debit card during the payoff process. If you are regularly tempted to overspend by using your credit card, then put it away. I'm not one of those people that says credit cards. You should never have one because I don't, I don't agree with that. But if you can't control your behavior with the credit card. Or you're already in t card debt, it is time to put it away and just use cash or the debit card until you get that paid off.
And then tip number 10, create savings goals and a priority list for them. So an emergency fund should be at the top of the list.
If you don't have one, that would be enough to cover three to six months of expenses if you needed it. Once you have that, you can focus on saving for a home down payment, college fund for [00:10:00] the kids, your retirement, all of those kind of things. So different saving categories need different saving tools such as, you know, a savings account for the emergency fund.
Do a high yield one. We've got good interest rates for for that side of things. Right now, you know, maybe an IRA for retirement if you don't have a 401k through your work, things like that. Maybe a 529 plan for college. So you need to create goals for the different categories and then track your progress with them to make sure you are achieving them.
So those are my top 10 budgeting tips as you go into 2024 to get your budget on track to meet those savings goals we were just talking about, get the debt paid off and just have a lot more peace of mind and less stress in your home around money.
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