Budgeting

Can I afford to live like this? Coming to terms with your budget

April 24, 2020 /

Society today says we need big houses, fast cars, the latest technology, the trendiest clothing and accessories. So most of us live above our means to keep up with the world. All of us want to live in the “right now” instead of setting our sights and our sails on the future.

The two of us thought that, because we had a little money in our savings and weren’t as far into debt as some of our friends, things were going alright. We prioritized cars, vacations, too many dinners out, and just plain old crap that we really didn’t need over climbing out of debt. We tricked ourselves into believing this is just the way things were because this is how everyone else is living too. Well my friends, I’m here to tell you that is NOT your only option. Living within your means and prioritizing paying down that debt NOW will put you ahead in life. 

Grab A Glass of Water

This is where things get difficult to swallow. It’s never easy coming to terms with the real number of dollars you’re spending every month on non-essentials. In this post we’ll go over the very basic first three steps to understanding your finances.

  1. Calculate Your Take-Home Pay- This is what you will base your whole budget around. If you take home $2,500 a month, but you’re currently spending around $3,000 a month, well my friend…..it’s time to make some adjustments to your spending. Which takes us to step 2!
  2. Create Your Expense List- Write out every single expense you have for the month. Rent, mortgage, utilities, student loans, car payment, insurances, groceries, gas, Netflix, gym membership, EVERYTHING. Yes, this even includes that $10 monthly makeup subscription you forgot about!
  3. Identify Needs vs. Wants- This is where you trim the fat from your expenses. You NEED groceries every month. But do you NEED the name brand goods in every category? Or how about that gym membership that we only utilize once a year? We’re trying to live within our means, remember? Eliminate those extra expenses.

Putting it all Together

Okay, now we have a clear picture of what’s going on with our money. 

Once you know your take-home pay + your monthly expenses (needs) and identify the excess money you’ve been spending (wants), you can now map out a realistic monthly budget for yourself.

Congratulations! You’ve just poured the foundation to your house, and now it’s time to build upon it.

-mv