I have been avoiding talking about this for a while because let’s be honest it is not the most interesting topic to be talking about. As much as you might cringe at the thought of the word it is actually something all smart women should be doing.
I am unashamedly sharing my story to encourage like minded women to proactively plan for their futures and part of that involves being smart with your money and being smart means having a budget. I need a budget because I need to start paying attention to where my money is going. I have been doing a lot of reflecting recently and came to the realization that I wasn’t fully living to my full potential and I wasn’t really living life to its fullest. I took a hard look at myself and my life and saw that I make enough money to really enjoy the life I keep dreaming about but most of that money is going to service debt for things that really do not bring me that much joy.
Experiences bring me joy and these experiences usually come in the form of traveling and doing fun things with the family. I don’t get to travel as much as I would like to because of the money factor and this is because most of the money coming in is busy going out to pay for consumer debt such as credit cards , car loans and the all so awesome student loan. So this got me thinking and reflecting. What would our household income be like if we weren’t having to pay out to other people and boy did I like the figures and that was the beginning of the debt repayment journey.
I have learned that to be all in on something you have to learn from others, I mean why reinvent the wheel. I started off with a simple google search with the key words paying off debt. Who would have known there is a whole community of people out there that have already achieved what we are trying to achieve and I have been reading a lot of blogs and watched a lot of videos and I continue to submerge myself in reading as much as I can and learning about what steps have worked for those that have been able to kick debt to the curb. Key to success is having a budget or as others like to call it a spending plan. A spending plan is where you make a decision to be intentional with your spending, you basically make a plan on how your money will be spent. There is no one size fits all where this is concerned because people are different in the way they think. I generally had a rough idea of what was coming in and what was going out but never really sat down to plan appropriately.
The hubby and I sat down and had a hearty conversation about our finances and we both decided that it was time we started paying more attention. Based on my research the best way of ensuring success is to make sure you are both on the same page. We attended a budgeting class at our local church and the facilitator showed us the envelop method. This is where you allocate funds into different envelopes according to the different categories of your spending. You could allocate based on rent/mortgage groceries, transportation, clothing, tithing/charity, entertainment… you get the general idea. The envelop system is based on the principal that once you run out of funds in that category you are done and you have to wait till the next allocation date… when you next get paid. Other people use multiple debit card accounts to separate out how they spend and save their money it really depends on your preference. A good starting point if you are starting from zero is to look back your last 2 to 3 months spending habits as a starting point. Figure out what you spent where and see if there are areas you can start to cut down on. We have cut down on our eating out so that we can put more money towards travel and credit card pay down. Budgeting is a personal thing based on what you consider to be important to you. It shouldn’t cause you any stress. There are so many apps, blogs, vlogs, and websites that are dedicated to educating the likes of you and me that it will be easy for you to search around and see what woks for you.
I am looking forward to next year because I think it will be a great starting point… I will start with the end in mind by planning a year ahead as I feel that will make it easier to then work backwards this will especially be useful when planning spending towards travel, clothes etc. For simplicity sake if I want to save $1000 towards travel each year I would divide the $1000 by 12= $83 which I would round off to $85 and that will be allocation towards travel for each month. I would then do the same for each category. I feel that will remove the overwhelm and it will keep things manageable on a month by month basis. I find trying this out now would be a bit more tricky so we are just mainly focusing on our spending patterns as a data gathering process to help shape our future budget so for now we are tweaking and perfecting it on month to month process. We are using the debt snowball method to pay off our credit card balances and I am excited to share that we have cleared 3 that had small amounts totaling $1500. Slow but steady wins the game. So if you are on the fence about starting budgeting I would recommend you just start by paying attention to what you are spending on. Take the commitment to write down each and every transaction and then review it and do the math to guide you on how you would allocate your monthly income into the different spending categories. All I know is you have to find what would work for you.
With love and gratitude
Dr Fatsani Dogani