Money Struggles? Here’s one question to change it all…

Before I began the journey to become debt free, I was all over the place with money. One month would seem like, "I've got this! Why was I making things so hard?" Other months would seem like "how in the heck did I make this work last time? I don't have anything left!"

If that is how you are feeling month to month, there is one very important question you need to ask yourself. And you may need to have a few month’s worth of past budgets on hand if the answer isn't clear.

The one question is: Do I have a budgeting issue or an income problem?

Budgeting:

If you have a budgeting problem, things like overspending, not knowing your numbers, being inconsistent in creating a budget, not sticking to the budget or even intending on budgeting but never really following through with it could be the issue.

If this sounds like you, here are three tips to get you on your way to success with budgeting!

Tip #1 - Create your budget BEFORE the month starts!

This is One of the most common things that I see. A few days before the month starts, make sure your budget is ready to go! One way to do this without having to remember, is to put a reminder in your calendar. That way, you will be notified to do it and be reminded before the month begins.

Take a look at the calendar each month and be sure that you put the reminder on a date and time that works for your schedule. Putting a reminder during the middle of the workday where you can't get to it, will not work! What I have done in the past is created multiple reminders, in the case that I wasn't able to get to it with the first reminder. Now, I do my budget usually 5 days before the month ends.

Tip #2 - Use real, actual numbers!

In my past, I used to "eyeball" my budget. For example, instead of putting the actual numbers for my utility bill, I would put what I thought it was. So I would think, “I think this number is around $40.” Then, I would add $40 to my budget, never reconciling it with the actual bill. I do not recommend this.

You need to use real, actual numbers. So, if you were looking at the entry for your utilities, you need to put the actual amount due for the month for your utilities. What I found looking back at these old budgets, was that I was not using real actual numbers. Therefore, each entry was off by various amounts. Some more under by about $20, and others were under by about $60! This can create a very inconsistent budget, that does not give you a real, clear picture of what your finances look like.

Each month when you are creating a new budget, get all of your bills together and use the numbers accurately, down to the penny. This will give you a real idea of what is actually happening with your money. It will keep you from having large swings in your finances from month to month. Just to be clear, "eyeballing" a budget does not work.

Tip #3 - Once your budget is created, stick to it! (For the whole month!)

I think this is one of the toughest things to do when you first start budgeting. You can create an amazing, beautiful budget but if you aren't sticking to it, you will never see progress.

If you find that it's very difficult to stick to your budget, then you are probably budgeting unrealistically. If you find that certain categories are going over, like groceries, there are some tips I can give you to help you stick to those.

One of the hardest categories for people to stick to is grocery budgeting. I would say the thing that helped me the most at the beginning of this process, was to use cash for groceries. I knew once I got up to the register, if I didn't have enough in cash ahead of time, I would have to start putting things back and holding up the line. For most of us, that is a very embarrassing and or undesired experience. To avoid that, we will often total up everything we put into our basket ahead of time so that we are only spending the budgeted amount. And that's what I often find happens with cash. When we swipe or use our debit card, it doesn't have that same effect. For many of us, swiping can often lead to overspending because we don't "feel" the money that we're spending.

If you find that the reason that you're not sticking to the budget is because you’re running into several expenses not on your budget, you will want to make sure that those items get included for future months. Oftentimes, things that are forgotten on budgets are things like kids birthday parties, anniversaries, retirement, baby showers, school uniforms or Sports, work events or potlucks, Etc. We can avoid missing these things by using our calendar when we budget. Look at your upcoming month each month and see if you have any additional expenses that may be incurred. If so, include these on your budget.

If you find the reason you're not sticking to the budget is because you are overspending, take a look at where you're overspending. Some of the more common over spending categories are restaurants and online shopping.

It could be so easy to justify going out to dinner especially if you've had a rough day. Because of this covid-19, this can happen more often than it used to. Especially if you are working from home, homeschooling the kids, taking care of the household, walking the dog, it can all be too much at times. But if you're planning for these days, your budget will work! What you can do is set aside a certain amount of money for the month, that you can utilize for eating out.

If the problem is online shopping, look at the reason for the purchases. I know for me, this is one of my challenges as well. I will often remember something that I wanted to buy that I didn't include in my budget. So what do you do? Before, I would just go ahead and purchase it and my budget would go out the window. This did not work for me. Instead, now what I do if it's not included in the budget, I will list the item and add it to the following month's budget.

Now, if it's something I just wanted impulsively, and it's not necessarily needed or I don't want to include it in my budget, I don't buy it. This has been a major behavior change for me and has also been what has made me successful! Look at what you're purchasing and WHY. Decide whether it's a need or a want. This will help when you’re looking at the budget for the following month as well. And sometimes, we do have to tell ourselves no. In other cases, if it really is a needed item and it's not just a want, then we need to put it in the budget so that we can get it the following month.

Income:

If you have an income problem, you will see that the amount of money that you need each month is more than what you're bringing in. That is a problem. How do you fix it? Here are three ways that you can correct an income problem.

Possibility #1: Get a new job that pays more

If you have an income problem, it may mean that the current job you have is not paying enough to cover your monthly expenses. One way to resolve this problem is to find a new job. You will want a job that pays more than what you are currently making. In order to make this resolution work, you do want to make sure you understand how much money you will need both on the monthly and annual basis in order to make ends meet. Once you have that amount, look for jobs that will pay at that level or more. Now, this may seem overwhelming or daunting to do. I have taken this route in my past, and it has made all the difference. Does it mean that you only do this? No. You may need to do a combination of items within this possibility list while you are searching for a new position.

Possibility #2: Get a part-time job or side hustle.

This is a very good solution if a lot of your monthly expenses are being met, or you need some sort of temporary expenses. What can you do on a part-time basis? There are many things that are available to you, many of which many have very flexible schedules. You can do things like uber, Lyft, Amazon delivery, doordash, Postmates, instacart, or something more traditional like delivering pizzas. If you are more likely to start a side Hustle, there are many different types of things you can do here as well. Many things that are very easy to do or things like dog walking (which can earn you $20 to $25 per hour), becoming a virtual assistant, watching other people's children, finding work as a freelancer, and many other things. Starting a side hustle does not mean that there has to be huge amounts of start up costs. Your creativity is your only limitation!

Possibility #3: Decrease you monthly expenses

Another possibility is to decrease your monthly expenses. If you are looking at your budget for the month, and realizing that part of the problem is that your expenses are just too high, you can change that.

Many people find that their largest expense is their rent or mortgage. If this is the case, there are a few things that you can do to change this. If you want to stay in the same home but your mortgage is too high, you can look at refinancing your mortgage. If that doesn't make financial sense, then that is not an option to you. What you may want to look at, is can you afford the home that you're in?

If you're a renter, you may want to look at the amount of money being paid each month for your rent. A good rule of thumb is about 25% of your income should be allotted for your rent. If your rent is double this, this may be something that you need to look at. You may want to find a place that is a little less expensive so that your monthly budget is more aligned with your income. If you realize that your rent or mortgage is a much higher percentage of your take home pay, but you want to stay, what do you do?

If it were me, I would go back to possibility number one and start looking for a higher-paying job. If you are making more money, that will change the ratio that you are spending on your rent or mortgage.

If something other than your rent or mortgage is creating a high monthly expense for you, take a look at what that is. Is this something that can be changed or altered? Is there another way of going about this? What can be eliminated from your monthly budget each month that you don't really need? Looking at this overall, will help you understand where your money is going and where or if changes need to be made.

When I first started my debt free journey, I realized I had an income problem.

I had a higher amount of expenses then I had an income coming in. I had to address that problem first. I went and got a different job. In the time leading up to that new job, I moved in with family and I took on extra work as well. I had two additional part-time jobs that I worked to make ends meet each month. Once I got into that new job, I was able to quit those part-time jobs and focus on this one better job. Once I got my income in alignment, I was able to start focusing on my budget. Once I cut my debt down by $60,000, I was able to move into my own place again.

There are solutions and possibilities for you, you may just feel overwhelmed at the moment. Being overwhelmed might mask possible solutions or paths to getting out of where you're at. I have been there.

My goal is to help you find those solutions and make your money work for you! The one thing that I would hope that you take away from this is no matter where you start, you can be successful with your money and reach any financial goal!

You just have to start.