Budgeting Advice

[Anonymous]

Hey everyone,

As you can probably tell, I am new to this forum. I'm in the process of rebuilding my credit and I'm also trying to learn some good budgeting /finance tips.

Long story short, I was in a role as an insurance salesman and made decent money. I didn't save a dime of it and spent it all and then I lost everything when I was terminated from that role. Nearly a year later, I'm back in the same position with a different company. I know what I'm able to earn in this role and my plan this time is to actually save and invest it.

I'm in the process of trying to get an apartment and I've made an excel spreadsheet going over my expenses for the next 4-5 months. I have it set up showing which bills to pay with each paycheck, including gas and groceries. I'm thinking I might do that for the entire year but any advice on other successful habits is appreciated.

[VanderSnoot]

Check out YNAB. If you're happy with your spreadsheet, you don't have to use it, but understanding how it works and hearing how other people define their categories may make your spreadsheet more robust.

[CreditInspired]

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@Anonymous wrote:

Hey everyone,

As you can probably tell, I am new to this forum. I'm in the process of rebuilding my credit and I'm also trying to learn some good budgeting /finance tips.

Long story short, I was in a role as an insurance salesman and made decent money. I didn't save a dime of it and spent it all and then I lost everything when I was terminated from that role. Nearly a year later, I'm back in the same position with a different company. I know what I'm able to earn in this role and my plan this time is to actually save and invest it.

I'm in the process of trying to get an apartment and I've made an excel spreadsheet going over my expenses for the next 4-5 months. I have it set up showing which bills to pay with each paycheck, including gas and groceries. I'm thinking I might do that for the entire year but any advice on other successful habits is appreciated.

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Hi and welcome to myFICO

I have done my budget using Excel for going on 4 years now and it works great for me. I also treat myself as an expense and have a line item dedicated to me. So for example, $100/mo per pay period for me to do as I wish because my spreadsheet includes all my expenses--cleaners, savings, transpo, entertainment, and even a line item for miscellaneous.

I also account for every penny I earn and spend by using the app checkbook pro, which I've used faithfully for 3 years. 

Kudos to you for wanting to do the right thing this time around. 

[Anonymous]

Hey,

Thank you both for the advice. I'll try out both of the apps mentioned and see which one I like the most. I've been using Mint and it's helped me realize where the majority of my money goes, which is food. I think last month I spent about $600 on just eating out. With that being said I went out and bought groceries for the week and spent $40. That should help me out a lot lol

[Anonymous]

You are definitely not alone. I'm willing to bet most of us have had an "I spent HOW MUCH at Starbucks!?!?" moment. I know I sure did. That's the value of a budget, it forces you to look at the whole picture. The daily $5 card swipes or $20 Amazon orders can seem insignificant until you see them all added up. Now you can identify and work on the problem areas.

My advice is make a line item for savings in your budget, and automate it as much as possible. We have a set amount go directly into savings, setup through direct deposit at work. You don't have to think about it, no temptation to skip this month because you want to spend it on something else.

I didn't start living on a budget until I got married. I dreaded it, thinking it was going to be so restricted. But it turned out to be the opposite. It freed me. The budget lets me know what I can afford and gives me permission to spend. No guilt or dreading when the CC bill showed up.

[tacpoly]

Pay yourself first — that is, put money into savings first, before anything else.
a) If your company provides a 401k match, contribute enough into a 401k to get the full match. Don’t say no to free money.

b) Then set up an account for your savings that you will not access except in the direst of emergencies (eg. long-term unemployment or hospitalization, buying a house) and direct deposit a portion of your income every pay period. Establish a savings goal for the year (eg. $20k or 300k per year) and divide it by the number of pay periods. Because it is taken out automatically, you won’t even miss it. You should think of investing this money — but keep it fairly liquid (eg. stocks, 1-year cd or t-bills) until you have a decent chunk saved from (c) below.

c) Live off the remaining amount that will be direct deposited to your checking. This should be enough to cover your recurring bills and some frivolity. This doesn’t mean you spend all this money — you should still try to manage your spending — because the amount left over is what you will use to establish an “emergency fund” for those small unexpected expenses (eg. car repair, emergency trip, etc...) and large planned expenses (vacations, car, tv, computer, etc).

d) If you can establish a side hustle to earn more money, you can apportion that income to long-term and short-term savings as well.

e) Save your bonuses and raises (put in b). The amount of money you apportion in (c) should leave you comfortable, not feeling impoverished, so you can remain at that level for years while you increase your savings rate as your income increases.

f) Google “If You Can” by William Bernstein. Download the free 16 page guide on how to get rich slowly, written by someone who has done incredibly well investing, and READ it.