Getting out of college, I wanted to win at the ‘being an adult’ thing. I wanted to get a well-paying job, pay off my loans in a snap, start traveling and being financially, mentally, and socially stable. And while I’ve met many goals, there is one skill that I don’t think I could have managed my transition into adulthood without!
Money makes the world go round. It’s not going anywhere; the more you have, the easier life seemingly gets.
Having struggled for several years keeping gas in the gas tank and skipping breakfast often to save $4, I am so incredibly grateful to have a steady paycheck that allows me to have an apartment close to work and go out with friends from time to time. But while many have a steady paycheck and get further and further into debt, I am able to stay afloat and thrive due to a very small but potent difference.
I LEARNED TO BUDGET EVERY. SINGLE. MONTH.
On graduating, I had no idea what to do with ‘all the money’ coming in each month. I was living at home with the parents, and so I put 80% of my paychecks to my loans and they very slowly started to lessen. The other 20% I used to tithe and take care of my weekly expenses. (Guess I was born with the sense not to spend it all.)
My parents didn’t seriously budget for the first 25 years of their marriage, so at about this time, we three took a course on financial planning from a guy, Dave Ramsey, who created Financial Peace University and wrote dozens of best-selling books on money and learning to get rich.
I was able to attend 6 weeks of his 9-week video course and learned many of the money myths I had thought to be true in college, as well as WHAT A BUDGET LOOKED AND OPERATED like.
Dave Ramsey also has a budgeting app that looks super cool. I haven’t used it as I write a paper budget from him each month, but check it out and let me know if you like it!
Now after budgeting every single month for over four years, I seriously can’t buy a single thing without consulting the almighty budget to see if I have money for it. And It’s GREAT!!
The BEAUTY OF BUDGETING
I never, ever have to worry if I will break the bank when I buy that extra shirt at H&M.
I am able to watch my savings grow and my loan debt lesson at the same time.
Going out to eat with friends is more relaxing because I have set aside money to enjoy myself.
I don’t have credit card debt.
Saving for a trip or big ‘i earned this’ item every once in a while can be easily saved up for, and paid for IN CASH.
Budgeting allows me to allocate for charity, tithing, and gifts.
I am able to pay off my student loans 2.5 times faster.
If you are a college grad, you will appreciate that last one. Debt is CRIPPLING. And if you’ve never owed anyone any money, that won’t make sense. But for the rest of us humans, having to scrounge around for an extra $2000 a month to pay monthly loans, or trying to cough up $1400 to replace a crashed bumper is a shot to the gut and makes you feel sick.
Since learning to budget, I’ve almost paid off $42,000 in four years, and am able to live alone on a teacher’s salary, travel, and still go out on a weekend every so often., as well as hit so many personal goals over the years. (Again, if you’ve never had a car payment, mortgage payment, insurance payment, credit card payment before, move along, or give me some of that nice moolah you have.)
Budgeting is not just if you have car payments or need to pay off one of those credit cards from hell. I plan on budgeting when I don’t have debts. When I am finished with my loans, that’s when I plan on starting to SAVE UP and PAY CASH for my first new car, my own home or apartment.
Last year, budgeting allowed me to take a 10 day trip to Ireland over the summer entirely paid for IN CASH!
So, here are a few rules if you are interested in budgeting to keep you on the financial straight and narrow.
The Rules of Budgeting
A) Never spend A PENNY from your paycheck until you know where everything is going.
Since I am in the habit of knowing that there IS A LIMIT to my spending, I’m acquired a guilt in swiping my card before I’ve written the physical budget for the month. If I go out and spend $20 bowling with friends on April 1st, and write the budget and find out I only have $15 left for fun for the month, then I end up subtracting $5 from my grocery bill and give up coffee for the next two weeks. That’s never fun.
Now that is an example, but it’s meant to illustrate how much happier I am spending the money after I know what I’ve got to spend, rather than dreading moving extra numbers around the day after.
B) Prioritize your spending: BILLS, Savings, and then everything else.
I am much more likely to save big for paying off stuff and putting money towards savings if I first budget for my needs, THEN for my wants.
Also, I am more likely to give generously to paying off my student loans before counting in shopping money, then if I count shopping money first, and give less for loans. That’s just how I operate. Goals, goals, goals, have to come first!
C) CASH, CASH, CASH.
If you don’t have enough cash in your wallet, you can’t afford it right now. I promise you will spend less by far if you are using the green instead of the plastic.
When you feel the money in your fingers, and then hand over to $20s for a new blouse or skirt, YOU WILL RETHINK OVERSPENDING on your wardrobe.
I can guarantee you.
D) If you are budgeting only the cash in your bank account, you do not need a credit card, WHATSOEVER!
I ask you, where is the logic in spending $65 at Pac Sun, then paying the credit company an extra $2.60 (4% interest) for using the credit card, when you could have saved the $2.60, USED YOUR OWN MONEY from YOUR OWN bank account, and spent it on ice cream for yourself?
THE BIGGEST MONEY MYTH EVER: You need credit cards to live.
Truth: You don’t need a credit score to pay your first home downpayment in cash.
Truth: Having $10,000 in savings is the same thing as having a credit card without the contract, interest, late fees, or fear of not paying your bill on time and incurring debt.
Truth: If you only spend what is your actual bank account, YOU WILL NEVER GET IN DEBT! Think about that for a sec.
Oh, and if they tell you that you don’t get charged extra if you pay your credit card off on time, that BS, because 89% of Americans don’t do that and have to pay the interest! (If you don’t believe me, go look up DAVE RAMSEY.)
So, Budgeting. Do It. Love It. Save It. Spend It.
Have fun enjoying financial peace and watching other people panic over their overspent charge accounts. It gets funny watching silly people think they’re smart.
Seriously, please don’t be those people when you don’t have to be.
See you out there!
(On a side note, I am not representing Dave Ramsey, or Financial Peace University. These comments are strictly my own, and I am not receiving any commission for sharing them. – Anne)9