Money in, money out.
It seems like a simple concept, but it’s incredibly complex!
You might know how much money you will make every pay period, and how much you bring home, but do you pay close attention to how that money’s spent? Or do you find yourself pinching pennies and cutting corners in the last few days before payday?
It’s possible to fix this! All you need is a budget based on how much you get paid and when.
Here’s how to get started.
Collect your bills and statements.
Open your bank account, compile all your expenditures and start crunching numbers. See how much you’re actually spending in a month and break those costs into categories: bills, needs, and wants. Look at how much you’re spending on, say, entertainment, and make sure to include all streaming services for which you have a paid subscription. Some costs will need to be estimated, like gas and food, but factor in how often you go out for dinner or drinks, how often you have to pay a babysitter, how much you pay someone for lawn maintenance or pet sitting, etc. Write it all out.
Determine your real income.
If you’re a salaried employee, you know what you get paid every year. But that number is typically pre-tax; your actual take-home pay might be quite a bit less than back-of-a-napkin math might suggest. Open up a paystub and see how much you’re bringing home and make a note of how regularly this deposit is made or the check is received. Multiply this amount over the course of a month or a year to get a sense of what your take-home pay is — if you’re paid every two weeks, that’s one check multiplied 26 times, for example. If you have side jobs or other income from work outside your day job, do your best to estimate how much money you receive from that regularly (this might be impossible, but do your best, and if needed, base it on the lowest regular amount you’ve earned).
See if your numbers add up.
Now that you have the hard numbers see if things equal out. Are you able to justify spending what you spend on “wants,” or is it making it difficult to fulfill all your “needs”? Have you been putting any money aside for savings? If so, would you be able to replenish that account in a reasonable amount of time should an emergency expense come up? The spreadsheet might not look so good, but now you’re informed and ready to go.
Embrace a 50/30/20 structure.
This is a pretty common and straightforward division of money, in which 50% of your take-home income goes toward necessities (food, rent, utilities, etc.); 30% goes toward wants (nights out, takeout dinner, travel), and 20% goes toward savings and paying off debt, especially high-interest debts. It’s a pretty simple formula, but it does force people to shine a bright, hard light on how they’re spending their money and where extra dollars might be falling through the cracks. It will also help create a “rainy day” fund for unexpected expenses or, on the brighter side, rewards for all your hard work.
Find tools to help keep you on track.
There are so many budget tools available, mostly for free, that can help you stay the course with gentle reminders. From Quicken to Google to establishing a designated paper envelope in which to put checks for bills, there are plenty of tools and tricks available to you, at no additional cost, that can help you retrain your account and stick to your budget.
It might seem daunting, but you can make a budget, and you can make it work! It’s like learning to ride a bike with training wheels: They might seem kind of scary or a little silly, but learning to work within a budget will eventually open a whole new world of freedom and excitement. Good luck!
Find Your Next Job
If you decide you’re not making enough to save for the future while meeting your basic needs, it could be time for a new job. Contact Davis Staffing today — we work with great companies looking for someone with your skills and expertise, and they’re eager to talk with you. Call us today, and let’s get to work!