Fresh start with Finances - Budgeting for Beginners
New year new vision. I love this time of the year because it is a time for reflection over the past year and vision casting for what is to come. It is a time of new beginnings with hope for continued growth. I've heard it said we often overestimate what can be done in a day but underestimate what can be done in a week. With some sincere focus I have found in this area of finances I can actually start gaining ground and feeling encouraged that I'm headed in the right direction.
That said, today we are going to talk about what can be a very daunting subject for some because it feels overwhelming and yet we know it is crucial to living the expression of life we most desire. Scripture talks significantly about money and work pointing to the truth that we are to be good stewards of all God has given us and that certainly includes money.
There is so much information out there on how to think about this topic and many different schools of though however today we will just start with some basics.
Why does money managment matter?
Having a budget is not meant to be a burden to you but actually to set you free to enjoy what you get to do and have within the confines of knowing you can afford it and you know where you are heading financially. That your shopping or going out to eat adventures are not actually chaining you to working overtime for the next 3 years just to stay afloat but that you can enjoy fully and responsibly knowing that your biggest priorities and values in life are accounted for.
For me personally money management has been extremely helpful in my ability to pay off loans, have emergency savings, be able to be generous and have a plan for caring for myself and future family. Having these things in place gives me an ability to have more opportunities for myself as well as the satisfaction of a job well done.
I would be lying if I said these things happened overnight. It certainly has been a significant process to be able to have some savings and plan for retirement and pay off student loans. It can feel daunting but getting organized and having a plan for your finances is so worth it. Once I began to have little wins I was able to stay motivated and feel I was moving in the right direction even if it was a 10 year plan to get out of debt and have more financial freedom.
It is wonderful to be able to work and know that it is going toward creating a life that I love, that honors God, that allows me to be generous, that allows me to rest. No one else is going to manage our money for us or make sure that our goal to save for a downpayment or take a big trip happens. Its up to us to steward what we have.
4 Steps to budgeting and being a better steward of all God has entrusted you with!
Start where you are at:
The first step to this in knowing where you are at. Again this can often feel overwhelming if you have multiple cards, pay in cash, have an unpredictable income stream, have debt; but trust me this first step is crucial and very important. Often we don't actually want to know or take the time it takes to sit down and calculate or use an app to get all of this information in one place.
Pull up your credit card and debit card statements from the last 2-6 months
consider and think through any cash or other payments you may have made during that time frame
Find the amounts or any debt that you have whether that is credit card, car, student loan, mortgage
Highlight and break up you monthly personal expenses into categories such as groceries, restaurants, shopping, insurance, rent/mortgage, utilities, phone, insurance, travel, entertainment, savings, debt repayment- everything expense needs a category if it isn't listed here create one for that expense
Setting a realistic plan:
Once you have these categories mapped out with where you are at the next step is to review. Look over and ask yourself are my expenses over my income leading me into consumer debt? Are there any areas that are surprising with how much you are spending? Are there any areas that you could possibly reduce the spending? Are there any areas you would actually like to have a bigger budget for?
Be realistic when you are asking these questions. If you have been spending 300 a month on groceries every month don't set your new budget for 100 $ unless you plan to completely change what you are eating
examine your cash flow, are you able to save as you would like to? If not why? Can you realistically increase your income with more work or a second job? Is that actually feasible for you and the ideal life responsibilities you have considering your other needs (think spiritual growth, community, quiet time, health, exercise). Would it be more reasonable to delete the shopping apps and emails coming into your phone and limit your budget for shopping or restaurants rather than get a second job?
If you have debt can you fit into your budget an amount to pay it off each month? I recommend always starting with excess payments to credit card debt due to the extremely high interest rate.
Plan for an emergency saving account. I recommend at least $1000 because emergencies do come up and its much less stressful if you already have the savings.
Create your budgeting categories and budget based on the answer to these questions. This should give you an idea of how much debt you can pay off or how much savings you can have in the next six months based on prior spending.
3. Executing the plan: Tracking! Tracking the plan you now have is a must. I personally like to check in with my budget weekly or else I get to the end of the month and realize wow I went way over on shopping/ restaurants/ or groceries and I thought I was doing good. Weekly check ins allow me to twe
Tracking- This is really the point of all the work you have done up to here. If this step is not executed then you may know where you are at but no changes are actually made. Tracking is essential to budgeting. There are lots of ways to track your budget my personal favorite is with an app that connects to your bank so from it you can categorize your expenses easily and preset many of them to each of your budget categories. Recommended apps are Rocket Money, Empower or Simplifi
Set up your app or system of choice!- Again I personally like the apps because it takes maybe 30 minutes to and hour to set this up and then takes a lot of the work out of categorizing and tracking each month.
Weekly Check ins- Have 10 minutes set aside once a week to go into your app or system of choice. Weekly I will go in and review the transactions and make sure they are going into the correct category. From these more frequent check ins you can tweak your upcoming month. LIke opps I blew my shopping budget on the first weekend that new dress or boots will have to wait for next month. This step is useful because it can keep you on track
Monthly Review- At the end of the month I review and see how did you do? This is not time for shame or a guilt trip if it didn't go great. Think of it like data feedback on yourself as you are working to create a life you love and feel proud of. If you were off no worries tweak and keep going. Recently I realized my grocery budget keeps going over by a decent amount. After thinking this through I realized I have been impulse buying random seasonal snacks and treats on all my visits and a lot of food I buy is actually not getting eaten, Oops. So Im making the change to plan my grocery needs before I go to the store and have more structure so I remember exactly what I need and don't buy more than I can eat in a week because it looks tasty or cute for the holidays.
4. Follow up and Expanding Income/ Reducing Expenses
These weekly and monthly check ins are essential to money management. After some time this will actually begin to feel normal. No one else is going to manage your personal finances for you.
Looking bigger picture now from monthly to annually to 2-3 years you can actually begin to set some bigger goals and plan for future needs. If you want to buy a house having savings for a downpayment can save significant money on interest in the future. If you want a new car or your car is breaking down you can begin to save towards that to possibly even buy your car in cash - I did this and it saved me significnat money not just from interest but by being more practical in my purchase because its harder to pay your saved $17,000 than a financed $35,000. Looking at payments vs having the actual money leaving your account is a different feeling.
Tweak you budget as your income changes or expenses change
Give yourself a high five for being diligent in this important area of life.
Final Thoughts:
Scripture on Money
Proverbs 21:20 The wise store up choice food and olive oil, but the fools gulp theirs down
-This highlights the wisdom in saving and planning
Proverbs 22:7 The rich rule over the poor and the borrow is slave to the lender
-this speaks to the importance of avoiding debt and financial entanglements that can limit freedom and peace
Proverbs 31:16-17 She considers a field and buys it; out of her earnings she plants a vineyard. She sets about her work vigorously; her arms are strong for her tasks
-This praises and example of a woman who is wise in her investments and diligent in her work setting and example for financial stewardship- this woman is also generous to the poor and reaches out her hand to the needy
Proverbs 3: 9-10 Honor the Lord with your wealth, with the first-fruit of all your produce. Then you barns will be filled with plenty and your vats will be bursting with wine
- This highlights generosity and giving a portion of our income to the needs of Gods people as a path to the abundant life full of Gods provision and blessings.
