Remember my new year’s resolutions? Specifically the second one–planning a budget for the year and then sticking to it? I’m being tracked by Man Repeller (here!), but I didn’t want to bog all their readers down with the minutiae…. so I stuck them here, where I can bog you down. So… new year,
new me new spending habits and savings accounts!
Also, I’m including old pictures of me smiling in this post because I feel that without them this post might get a little text-y and difficult to read. Enjoy my face.
You know, some people are great at sticking to budgets when they’ve made huge lump categories of expenses. Unfortunately, I am not those people. My ADD-riddled brain means that I need small categories —very exact categories–in order to succeed at planning a budget and keeping track of things.
First thing’s first: record all your sources of income. I like to keep track of mine in terms of both monthly income/expenditures and annual income/expenditures, but how you like planning a budget is up to you.
Then, start categorizing your expenses. Mine go in this order: taxes, fixed, savings and variable.
A quick and easy way to determine your taxes by income and state is here. Immediately after calculating my gross income, I’ll calculate my entire tax situation to see what my net income is for the year/month. It makes it easier to determine other expense limits that way. (*Because my insurance gets taken out of my paycheck, I usually lump it in with this category. 401(k) contributions will also go into this category once I start to make them.)
Next go fixed expenses. Here, I’m talking rent, utilities, cell phone/internet bills, transportation costs and newspaper/Adobe/Spotify/Netflix subscriptions. (I was told here that fixed costs shouldn’t account for more than 50% of your take-home pay. Alas, I’m already over the limit.)
After fixed expenses come savings/goals. (The same article told me that you should aim to have at least 20% of your net pay go toward these goals.) These are payments/savings that will help you in the future, like an emergency fund (3-6 months fixed expenses), student loan payments, or your vacation fund.
Lastly, you have variable expenses. These should account for 30% of your annual spending or less, when you’re planning a budget. These expenses include groceries, clothes/clothes cleaning, gifts, shoes, entertainment of any sort, home maintenance, and your preferred method of cabbing home drunk.
Basic excel formulae, like these, are really important when planning a budget. They make things a lot easier and much more organized. (Excel is one of those things that make me wish I’d just bitten the bullet and taken a course on it in college. I hate it, but I think I hate learning about it on my own even more than that.)
We’ll just see whether or not I can stick to this budget. I’ve set up an account with Mint to keep closer track of my budget than just through my bank statements. That should do it, but just in case… keep me accountable, ok?