Have you ever wished you could go back in time and do things differently? I don’t have many regrets, but there’s one that still haunts me to this day. After graduating college and starting my first serious job, I was clueless when it came to budgeting. And the sad part was, my husband and I were probably in the best position to be set up for financial success. We both had decent paying jobs at a stage of life where we could have actually paid off all the debt we owed. But we didn’t. And honestly, I didn’t even know that was a “thing.” It wasn’t until my co-worker shared this concept with me called financial freedom that the lights turned on. Were there people out there who actually paid off their debt and lived on substantially less than they made? Yes. Those people really did exist. But the more I read about it, the more I realized they didn’t get there by chance. They had a plan called a budget.
So obviously no two budgets are going to look the same. Some people prefer to put pen to paper and write it out, others find it easier to use an envelope system, an app on their phone, or even budgeting software. It doesn’t matter the method you use, just as long as it actually works for you and you can stick to it. For me, an envelope system paired with an excel spreadsheet is easiest. Click below to access the fool-proof version of my excel spreadsheet.
If the envelope system is a foreign concept to you (as it was to me), let me explain. It’s basically an all-cash system for categories like groceries, gas, entertainment, clothing, or dining out to name a few. The concept here is to give your money some boundaries and allot a specific dollar amount to each category for the entire month. This practice can almost guarantee staying on target without overspending since you are using physical cash. Once it’s gone, it’s gone. However, if you come in under budget at the end of the month, you’ve just rewarded yourself with some extra cash to carry over into next month’s budget for that category. Score!
Understandably, carrying around a lot of cash isn’t exactly ideal in some cases, so another option is to use a debit card; it just involves a little more math, follow-up, and self-discipline. If you fund your checking account for all your monthly expenses, just keep your receipts and refer to your budget after you make a purchase. For example, if you budget $100 for clothing this month, and you just spent $50 on shoes, you now have $50 remaining in your checking account for any other clothing purchase for the rest of the month. Again, you’ll have to be a little more diligent on tracking those purchases, and keep that self-control in check to avoid getting too swipe-happy with your debit card.
If you’re thinking, “Kayla, that sounds too rigid. I want to have freedom with my money. Do I really have to be so specific about where my money goes?” If you want any success with money management, the answer is yes. And ironically, you will get exactly what you want – freedom. Boundaries allow us to have freedom within that space without overindulging. They are intentional, realistic parameters put in place to keep us on task and help us practice a little self-control. After all, successful budgeting is directly related to our behavior with money. If we have no discipline at all, chances are, our money is going to be controlling us, not the other way around. We don’t have to wonder at the end of the month where all the money went; we will know.