First of all, good for you… if you’ve been sticking with this Blog and the directions in it… Good . For. You.
Changing how we spend our money, look at money, make our money is no easy challenge. Money cuts right to some of our deepest core beliefs about ourselves and because of that changing that visceral part of us takes courage… and energy.
In Part Three of this blog (if you have not read Parts One and Two, please click HERE) We’re going to talk about how to keep track of your PREDICTABLE MONTHLY EXPENSES and your UNPREDICTABLE MONTHLY EXPENSES and even start to dabble in CATEGORIES (things like a HEADSHOT CATEGORY, an EDUCATION CATEGORY, a VACATION (gasp) CATEGORY and dare I even say it? A FUN CATEGORY!)
But first, let’s review our Basic Monthly Budgeting:
You have your MAGIC NUMBER – again, let’s say $3000.
For ease let’s say your PREDICTABLE MONTHLY EXPENSES is $1500 and your UNPREDICTABLE MONTHLY EXPENSES is $1500.
Take a moment to take out your little notebook that lists your daily in-coming money (salaries) and out-going money (expenses).
Ask yourself: “since I have been faithfully recording my in-coming and out-going expenses, is there any PREDICTABLE MONTHLY EXPENSE I forgot to add to my list of PREDICTABLE MONTHLY EXPENSES?
If the answer is no, great!
If the answer is yes, then add it and adjust your MAGIC NUMBER accordingly. Remember you are not going to be perfect with this, it’s OK to adjust as we go along.
Look at your little notebook and your UNPREDICTABLE MONTHLY EXPENSES – are they in line with previous calculations?
If you want to check, go back and add up each separate week (the more weeks of data you have the more accurate your budget will be) and whichever week has the HIGHEST number (Remember: More Money Not a Problem. Less Money a Problem!) multiply it by 5.
Again, yes I realize that most months only have four weeks in them, but again – More Money not a Problem. Less Money a Problem.)
Now lets look at the month of MARCH. March is what I consider to be a five week month and I divide the weeks and my $1500 of UNPREDICTABLE MONTHLY EXPENSES like this:
- 3/1 – 3/7 – $300
- 3/8 – 3/14 – $300
- 3/15 – 3/21 – $300
- 3/22 – 3/28 – $300
- 3/29 – 4/4 – $300
Now for someone who comes from having NO previous discipline with money – this breakdown is KEY.
I now know (and discipline myself) to only spend $300 between 3/1 and 3/8.
When I first started this, I did not allow myself to use credit cards or even a debit card and on the date (3/1, 3/8, 3/15, 3/22, 3/29) I would go to the ATM and get out my $300 cash. That way, I could SEE it in my wallet, I would KNOW that it was 3/2 and I was down to $125 and that THERE WAS A PROBLEM.
This made me AWARE.
I went through some TOUGH first few months with this, but stuck it out (sometimes eating food I would have preferred not too, but that was the food that I could afford so I could stay within my budget with so next week I would “be a little more careful”)
Using cash only for the first six months of really utilizing this Budget System helped me TREMENDOUSLY. It also simplified how I marked off my UNPREDICTABLE MONTHLY EXPENSES – I just had those five weekly ATM withdrawals.
NOW, if you feel you can handle this category with a credit card that is fine. Just heed a couple of warnings:
1 – you MUST mark down your credit card receipts off of your $1500 on a DAILY BASIS. With credit cards it is soooooo much easier to lose track. You are not seeing the money leave your possession.
2 – you MUST only use a credit card with a ZERO balance and it MUST be paid off at the end of every month and you MUST check off the expenses against your budget.
Ok, now onto your list of PREDICTABLE MONTHLY EXPENSES…
Again, using the $3000 MAGIC NUMBER as a guide, your PREDICTABLE MONTHLY EXPENSES is $1500.
At the beginning of the month, start paying these predictable expenses… and because you OVER budgeted them by $5 – $10 for each expense you may find that you have a little extra money…
See… More Money NOT A PROBLEM. Less Money a Problem.
Now pause for a minute here and acknowledge this… you have MORE money. You have “extra” money.
THIS IS A MOMENTOUS OCCASION – well, it was for me. CELEBRATE IT!
This surplus should first and foremost be used to cover any unsuspecting overages in your PREDICTABLE MONTHLY EXPENSES.
However, if there are none, you have choices (something having money gives you – choices!)
You can add it to your UNPREDICTABLE MONTHLY EXPENSES just in case you go over by mistake….
You could add it to one of your additional categories that I mentioned earlier in this blog… a Headshot Category, an Education Category, a Vacation Category, a FUN Category.
These categories are completely separate from your Monthly Budget and are added to when they can be, more on that later.
Next blog, I will be discussing these additional categories and also the concept of staying ahead of your Monthly Budget – how to start doing that and how to create a real cushion so you are no longer living paycheck to paycheck.
And thank you, this is a journey and I am honored to be on it with you.
In the meantime, keep reading these Money Blogs over and over again and keep logging your in-coming money and your out-going money.
You can do this.
P.S. I have only 3 spots left for the ACTING BUSINESS BOOT CAMP WEEKEND INTENSIVE on Saturday, February 22nd and Sunday, February 23rd! Click HEREto find out more.