How to get your finances under control with a budget and how to begin a budget if you’ve never been the one to manage your money in relationships in the past which is very common with newly single moms.
Below is an overview of my interview with Julie from the Bossy House about how to get bossy with your budget. For the complete conversation listen to episode #14 of Grace for Single Parents wherever you listen to podcasts.
Taking Charge of Your Finances
- No matter what your circumstances, whether you’re a partnered mom or a single mom, whether you have a ton of kids or not that many kids whether you know you’re single or in a relationship, you’ve got to take charge.
- A lot of folks out there feel like there’s nothing I can do about my finances. I have a finite amount of money coming in. I have all these bills, the kids want a bunch of stuff. I’m just, I’m just never going to get out from under this.
3 Red Flags of Budgeting
Bills are a Surprise
- So number one, when bills come in and they’re a surprise. So I hear a lot of women say things like, I’m just, I’m managing my money all the time. I’m in my bank account all the time. But, I got to the end of the month, there was nothing there.
- The first red flag for me in that scenario is why was the bill a surprise?
- Most of our bills that come in are the same amount every month, so your light bill, your mortgage, your rent, whatever it is, they’re mostly the same amount every single month and they also mostly come in at the same time every month.
- Knowing when they’re coming in and making a plan for which of your paychecks are going to pay each individual bill every month. Thinking about things in terms of a system instead of a linear process that whenever a bill comes in, I try to pay it.
- Telescope out and think about this as a big-picture system, you can calendar all your bills, decide what your paycheck is going to go towards each of those bills, and then not get surprised every month and not actually feel like you’re always behind and don’t have enough money for your bills.
Relying on Your Memory
- Such as remembering how much you had in your bank account and whether you can afford certain things. Those things are red flags.
- If you hate budgeting, you’re going to forget what you decided
What You Say About Your “Leftover Money”
- .When people say things like, any leftover money I have at the end of the month, I’m going to put towards my debt or I’m going to put towards my savings.
- We all know we don’t have any leftovers at the end of the month, we will spend whatever is in that account.
Getting Bossy About Your Budget = A System For Your Budget
- A system accounts for all of the timing issues and all of the revenue that’s coming in, your paycheck that’s coming in, and plans how the bills are going to get paid, and allows you to make all of your financial decisions one time.
- A system allows you to make a plan for every dollar that’s coming into your account and then making those decisions once and then automate everything.
- I do very little with my budget every month. Everything is automated, my paycheck comes into my account. I have five other accounts in my bank and it goes to all those accounts and what is left in my spending account is what I have to work with for cash for the rest of the month.
- And that system has really helped me build up an emergency account, which I never had before I started this plan. I just said, well emergencies, they’re going to go on the card. Right? You know, and then you’re in this debt cycle over and over and over again. You can’t afford them. You build up more debt.
- A zero-based budget basically means your account’s going to go down to zero every month. And some of us have that happen whether we want to or not because we’re really tight with our money.
- But even when we make more money than we need, going down to zero every month is great because it means every dollar that came in had had a purpose and we put it to that purpose instead of hoping at the end we wouldn’t spend some of it and could send it to our goals.
Getting Honest About Your Financial Picture
- If you write down all of your bills and when they come in and how much interest they’re charging every month for the debt that you have and you get an honest picture of what your situation is like and whether you can afford your life or not, you at least have an honest look at it.
- You’ll know exactly how much of a difference there is between what brings in an income and what we’ll have to put out in affording your life.
- And once you know that dollar amount it empowers you to do something about whatever is changing come stance maybe.
- You go further into debt when your expenses are above your income and if you knew exactly how much it was, you can cut costs.
- There’s this weird statistic that 80% of Americans believe that they are going to get a windfall to help them pay off their debt. Like they’re going to win the lottery or they’re going to get an inheritance or they’re going to get an enormous raise. It’s just like sort of magical thinking that somebody’s coming to give you 15 grand to get you out of debt.
- So many of us have debt I think it’s really good to get an honest picture. It is not fun, but I also think it won’t take that much time.
- Ultimately you need to take a couple of passes at your online banking. So this isn’t about getting out every receipt cause nobody’s going to do that. This is about going into your online and debit account or wherever you make most of your purchases. If it’s on a card because you’re trying to get points or whatever it is, you go through that and you’re going to make some lists.
- You’re going to list all of your bills, you’re going to figure out in one month what are all the regular bills that come in and you just have to go back a month to do that. So that’ll take you 15 minutes to figure out what are all my regular bills. You probably remember most of them.
- And then I would take another 45 minutes, go through again and list out all the items you spend money on in a given week or in a given month. So like your cash spending, your yoga class, your groceries, the latte, a babysitter for the kids.
- Finding out exactly how much you need to live on in a week. So there are ways to find out exactly how much your spending is and with just those two pieces of information, how much your spending is and the timing of your bills, you can make a lot of really big decisions about how to use your income.
Mindset & Money
- A lot of us grew up with this idea that the men in our lives were in charge of the money and a lot of us maybe were in marriages or in partnerships where the men took care of the money and maybe some of us found out that they didn’t do such a great job. And what I would say is women manage most of the finances in this country.
- If you have an idea that this is somehow not for you, or you’re not good at it, this is something you can learn. There’s not a genetic component to this that some people come born good at money and some don’t. All of us can learn this.
- I empower everybody: Take charge of your finances.
- These are finite skills you can learn and you can learn by doing them in your own bank account with your own money management system.
This was an overview of my interview with Julie from the Bossy House about how to get bossy with your budget. For the complete conversation listen to episode #14 of Grace for Single Parents wherever you listen to podcasts.