We bought our first home back right before we got married, and oh were we clueless. We had a budget based on guesses and fake numbers and it took a lot of tweaking. Now, ten years later, we’ve sold our first home and purchased a second one. We figured out what we want and need in a house and how all of those numbers shake out in real money.
All of that said, we still stick pretty tightly to our budget. My college roommate still can not believe I live by such a plan. Gone are the days when I would drag us on shopping sprees in the bookstore because my student account had been refilled. Here are the days when I know we’ll have enough budgeted to pay our property taxes.
I know budget sounds like a scary, boring and rule filled word, but I have a few things that are pretty easy to implement that can yield some results without constantly thinking about and worrying about money.
1. Know your expenses. It’s impossible to put any sort of plan in place without knowing what you spend monthly and yearly. Write it all down. Include what you’re spending at Target and Starbucks, what your cable bill runs, dining out, groceries, gas, kids activities, all of it. There are apps for doing this, although I’m a big fan of putting pen to paper. (Sharpie pens, preferably.)
That’s the hardest part. Once you’ve made that list, look at the numbers. Total them. What does the total look like compared to your monthly income? Which numbers seem high? What can be reduced or eliminated?
2. Decide on a savings goal. Once you’ve seen your budget, it’s much easier to figure out what is a realistic amount to put toward savings. Maybe you’ll decide to forgo dining out and transfer that amount to savings. You might realize that $5 for coffee IS insane.
3. Pay yourself first. We have a set amount that we transfer to savings every month, and I do that on the first of the month. Sometimes (but less often than I would like) I’m able to transfer more if one of us has made more money that we expect. I make sure we don’t have any unexpected expenses coming up, and transfer anything that’s left outside of what we have to spend of the rest of the month. If I were to leave that money in the checking account, we would spend it for sure. Out of sight, out of mind, in your pocket.
4. Cash. The easiest way for us to avoid overspending is to take out cash for all of our fun expenses. This includes gifts, dining out, and our own personal spending money. It’s very easy to forget swiping your debit card, but cash is visual. When it’s gone, it’s gone.
Buying a home and imagining your life in a new space can be really fun, but also really overwhelming. Capital One has an “Online Neighborhood” that will help you navigate the entire buying process, starting when what you can afford and taking you through what documents you should gather for your mortgage application.
Now who wants to talk paint colors?
I was selected for this opportunity as a member of Clever Girls and the content and opinions expressed here are all my own.