Thursday, April 14, 2016

Thrifty Thursday: The one FREE financial tool that will change your life

*NOTE: This is a merely reflective post and not official financial advice. Consult a financial advisor or planner for official financial advice.

You need a budget.

Seriously, you do. 

If you don't have a clear and updated budget, it's time to sit down and make yourself one. Not only is crafting a budget a great way to see how much money you actually need for bills and necessities, it's also a great way to see where all your money is going.

I knew a few things about my money:
I knew I wanted more (who doesn't?)
I knew that I spent a lot of it on fun
I knew that I covered my bills.
But I also knew that I should be saving more.
It wasn't until I sat down with all of my bills and bank statements and went through them all that I could see clearly exactly how much was going to the necessities, and how much was going to fun.

It was an eye opening experience to say the least.

I learned that so many of my behaviors, while they seemed harmless, were actually very expensive. Like eating take-out multiple times a week. Like random sprees on eBay. 

In fact, I learned that even my ONE venti cup of Starbucks coffee in the morning every day of the work week, while it didn't seem like much at the time, was sapping me of almost $70 a month. 

Meanwhile, I was spending $20/month on a gym membership I didn't use, and (the worst part) was putting away a measly $20 a month for savings. Talk about priorities...

The kicks part? I have a coffee maker and coffee at home. All I would have to do would be to set up the thing and turn it on in the morning, thus creating a cup of coffee that costs a 10th of what one at a coffee house would.

Basically, I found out I was paying almost $70 for laziness and giving virtually nothing to my future. Ouch...

This January, all of that dramatically changed. The savings got a MAJOR boost while I relegated my Starbucks purchases to rare occasions. I even started to use that gym membership (although my attendance is still pretty erratic).

Here's what I did:
I took the Net of what I make each month (not Gross, because taxes)
Then I add up all of my monthly expenses (bills and ish).
I then subtract the monthly expenses total from my monthly net (because that's what's going to happen when your bills get paid.

What's left? That's the money you use to do 2 things:
Save and Spend. However you divide this cash up, you should be saving a portion of it. Having a savings will come in handy in a pinch, in emergencies, or for a goal, like a house, new car, or dream vacation.

I recommend refreshing your budget every year. 
- The price of some bills change. For instance, my health insurance bill dropped pretty dramatically, thus freeing up some extra cash
- You might reconsider those subscriptions and memberships. Got one of those$10 a month beauty boxes where you never use the products? Got a magazine that you NEVER read? Gotta gym pass that's collecting dust? Might want to consider getting rid of those. You might be surprised how much extra cash gets instantly freed up once look at it all.

Having a budget has really changed my life and is helping me reach a lot of my financial goals while giving me clear direction for my funds. Having this much direction over my money helps me have more control over it, and that's a very good thing.

Do you have a budget? How has having a budget helped you? Comment below!