Pinching Pennies While Staying Positive

Do you have a financial goal that you just can’t seem to reach because of endless bills and expenses? Well, you need to start planning towards your future and get familiar with a word that might make the hair on your arms stand- budgeting. As a person that is a year out of graduate school and married, I definitely understand that money does not grow off of trees. I do, however, know first hand that a dollar can go a long way. If you are like me and paying off student loans while saving for another important goal such as acquiring additional education, going on a much needed vacation, buying a new car, or in my case, becoming a homeowner for the first time, then you know that a lot of planning goes into making these goals happen. My love for planning comes naturally as a teacher obsessed with planners, idea notebooks, and organization in general. The idea of budgeting just seems like an opportunity for more planning and an excuse to buy cute stationery. The combination of my type A personality and my love for achieving goals makes budgeting my superpower. Even if this does not describe you, you can make budgeting your superpower too, if you stay persistent and positive.

The first step in budgeting is to remember to pay yourself first. My dad taught me this at a young age and I never forgot it. The only way to save money is to, well, save money. Write down how much your household monthly gross income is (this is the money that actually makes its way into your bank account every month.) My husband and I both get paid bimonthly, so we both multiply our paycheck by two and then add these two amounts together. Once you get this total, figure out what 10 percent of your total monthly income is to see how much you need to set aside for savings and debt. Unfortunately, if you have monthly student loan payments, credit card debt, or medical bills, these expenses will eat into your savings until you pay them off. It may not be feasible to save 10 percent of your income while also paying off debts. It is important to pay off these debts because if you don’t, your credit score will suffer. You might need to subtract your monthly debt payments from 10 percent of your monthly income. This number will be how much you will put directly into saving a month. My husband and I have been able to save 10 percent and pay the monthly student loans, but this will depend on how much your other living expenses cost. The method you use to save is also up to you. My husband and I put some into a savings account and the leftover into stocks that accrue dividends. You may also choose to use more of your income for savings if or when you have leftover money at the end of the month. Part of budgeting is playing around with numbers and figuring out what works best for you based on your financial situation.

The next step is writing down your necessities and figuring out how much these non-negotiables cost. You really need to get out your calculator, especially if you have the math skills of an English teacher as I do. These expenses can include rent or mortgage, food, electricity bill, water bill, internet, phone bill, gas for your car, car payments, pet supplies, insurance, groceries, an emergency fund for unexpected doctor bills or home repairs, and anything else you need every single month. For costs that will not be exactly the same each month such as electricity or gas, estimate the high end and put this number in your budget. Believe me, it is better to spend less than you were expecting and have leftover money, than to spend too much on other non-essentials and having to light candles because you could not pay your electricity bill. These unavoidable expenses will end up being 30–60 percent of your income. These costs vary because of the broad range of expenses based on the area you live in and your lifestyle. My biggest tip here is to try to live below your means and refrain from getting yourself hooked into an expensive car payment or rent that is above the average cost for the area that you live in. My husband and I bought our cars from car auctions for cheap, so we do not have car payments and we rent a property from my parents for a very reasonable price. I want to be transparent about where we are extremely lucky, so no one leaves reading this with unreasonable goals or with the thought that necessities should be eliminated. Give yourself grace when budgeting because just like life, living expenses can be chaotic.

Now we are finally on the fun stuff! See how much you have left over after savings, debt payments, and necessities. About 10 percent of your income can be thought of as an allowance. This is the money you use for entertainment and fun purchases. For me this is mostly spent on clothes and for my husband this is mostly spent on musical equipment. We also enjoy going out to eat and going to concerts ,so we put this in our entertainment budget. This budget is more flexible because you can spend more one month on something more extravagant if you make sure to not spend as much for the next month or so. If you love to travel, you can use some of your entertainment budget every month to eventually go on a trip. Make sure to have fun even when you are on a tight budget. My husband and I went on our honeymoon for under $1,000 and had a great time. We did this by going somewhere within driving distance (New Orleans from Mississippi) and by researching to find free events and attractions. You can do this for weekend activities as well. Check for free concerts in local parks, donation based museums, or just beautiful scenery you would like to see. I now live in Houston, Texas so these opportunities are endless, but even in small towns there are fun activities that you can do. When we lived in the outskirts of Oxford, Mississippi, we would do outdoor activities such as walking in the park or playing tennis. It might take some thought and creativity, but trust me, you can have fun and budget at the same time!

The following pie chart demonstrates possible percentages for your monthly spending:

Budgeting can be challenging and seem dull at times, but if you have grand goals for your future, it can come with many rewards. After all of our expenses are paid, my husband and I usually have leftover money (about 20%) that we put towards saving for a down payment on a house. By being mindful of our expenses, we will have enough money to buy the house we are currently renting in a few months! Think of budgeting like an exercise routine, just because you are not perfect, it does not mean you are not making progress. Forgive yourself for splurging and move on. Dwelling on mistakes can make us give up, so remember that you can always get back to reaching your goals. Stay positive and celebrate all of your financial wins.