There was a time I would have thought an appliance breaking in my home would be a financial nightmare to deal with, but because of some frugal habits and planning, a couple of would-be major issues turned into minor ones. As far as my issues goes – I had a bathroom plumbing issue, my TV broke, then I had a kitchen plumbing issue. All within a month! Everything has now been fixed, and I think I handled the different situations well, financially speaking. Let’s go over everything that happened and I’d like you to help me judge how I did. Now, I’m going to preface these stories by telling you that I’m not great at being handy at home, but the Internet is available to help me along the way.

1. The first had to be the worst. A bathroom sink drain was leaking into a room on the opposite side of the wall. Aside from the occasional toilet flush valve breaking, I’ve never had a serious plumbing issue before, so I made a knee-jerk reaction to call a plumber to get a quote. To fix the problem, the plumber had to cut a hole in the wall on the other side of the wall from the bathroom sink. He found that my sewer outlet was the issue and recommended cleaning it out to allow things to flow and not back up at that part of the house. This required him to scale my roof and snake the main drain to clear it. $550 later and the problem was fixed. I think I made an okay decision here, but not the best. If I wasn’t afraid of heights, maybe I could have rented a large drain snake and cleaned the main myself. That way, I could have saved myself $550 on a plumber. I also had to spend $50 on the material and tools to patch the huge hole in my wall that the plumber left. I’ve never had to patch a wall before, but YouTube had me covered. (it’s not great looking, but it’s behind a dresser) Overall, I’d say this was a learning experience. If I ever need to clear the drain from the roof again, I may call around for a better quote. Unfortunately, my fear heights has me turning to my wallet to solve this kind of issue.
2. The second minor emergency was that my TV suddenly broke! And I was in the middle of my favorite show! This is most definitely not the worst thing that could have happened, but still a first-world inconvenience if I’ve ever had one. As I was watching TV one night, it suddenly shut off and wouldn’t power back on. After scouring the Internet for possible fixes and attempting all the button pushing configurations on the remote, I learned that maybe my issue is an internal component. My TV was essentially broken. I’ve never had a TV break on me before, so I didn’t exactly know what to do. I don’t know anything about electronics and microchip boards, so what was I to do? Do I buy a new TV? Are TV repairmen still a thing? Turns out that YES they are! It’s not just something from old movies. Also, they cost way less than buying a new TV. The repair cost me $250 to replace and reinforce a piece on the internal power board. It was an odd expense, as I never expected to call a TV repairperson in my life. I won’t complain, as it’s better than buying an equivalent replacement TV. To replace my TV with the exact same brand and model would have cost me well over $1000. I bought the TV way before my frugal habit days and I would dread having to actually replace it. I think I made the right decision here.
3. The last issue I faced was another plumbing issue, this time in the kitchen. This one was entirely my fault, and I fully accept the blame. I was installing a water filter under the sink and broke the faucet’s cold water line. This meant that I needed to replace the entire faucet, as the hot/cold waterlines are built into it. Thankfully, this particular issue was easily solved with a couple of YouTube videos and a trip to Home Depot. Now I have a new touch-less kitchen faucet! This repair cost me just under $100. I’m comfortable saying I made the right decision here by doing the repair on my own and not calling a handyman or plumber. 

I’m fully aware that most people are not able to handle a $400 emergency [find research] and may likely go into debt to perform any of the repairs I recently experienced. I used to be in a similar position. It’s not fun to suddenly find ourselves staring down a home repair with no way to financially handle it. The answer to this is to build an emergency fund. Because of my emergency fund, I had some money set aside to weather this storm and call it a minor inconvenience. Rounding up, I spent about $1000 on repairs last month with money I had put aside for just the occasion. Of course, I will now need to add money back into my emergency fund over the next months, but the plus side is that I didn’t go into debt.

There are a couple of ways to go about paying for emergencies and turning them into minor inconveniences.

• In episode 4, we discussed emergency savings. About putting money aside for literally what it sounds like – emergency situations. This way, you build up a stash of money to pull from whenever a large issue arises. Your emergency savings gets replenished when used, and is only ever used for emergencies.

• In episode 6, I talked about sinking funds. If you’re aware that you may have to perform a future home repair or replace something, you may want to plan accordingly and budget out a small portion each month to build towards its cost. For example, if you know that in one year you will have to replace your old stove and it will cost $600 for a new one. Using sinking funds, set aside $50 each month for 12 months to build up the $600 needed.

Planning and budgeting is crucial to avoiding debt. Whichever method you use, you will be prepared for whatever financial emergency may come your way.

Question of the episode:

Have you had any recent emergencies that you took care of with your emergency fund? Also, what would you have done in my three situations? I’d love to hear from you! Leave your answer in the comment section below.

The post Making mole hills out of mountains – CCS009 appeared first on Common Cents Saving.

Before we get started, if you’d like to sign up for Mint Mobile, please use my referral link: http://fbuy.me/tHV1l

I think people spend more time choosing which model of phone they want than deciding on their mobile carrier. I sure didn’t care about the carrier, so long as my phone worked when I needed it to. I’m the kind of person who believes “If it’s not broken, then don’t mess with it.” My previous cell provider of choice was T-Mobile. I had T-Mobile for so long, they weren’t even called T-Mobile when I got my first phone with them as a kid, they were known as VoiceStream Wireless. I just never thought to switch because I had always heard horror stories about outrageously high bills from the other big carriers like Verizon and AT&T. T-Mobile’s phone service worked with minimal issues for over two decades. The only problem I ever had was the steadily growing price over the years.

I’ve been hesitant to switch carriers due to mild brand loyalty, but my frugality is more important than loyalty to a company. I’ve known about other MVNO (mobile virtual network operator) companies like Cricket, MetroPCS and Visual, but refused to make the jump. Again, my service wasn’t broken and the price wasn’t the worst, so why would I change it?

Though I said T-Mobile’s price wasn’t the worst, what I meant was that it’s not the worst when comparing to the other top carriers. For example, at the time of this recording, Verizon’s least expensive prepaid plan is $40 per month for unlimited talk, text and 5 GB of data. AT&T’s least expensive prepaid plan is $50 for unlimited talk, text and 4 GB of data. T-Mobile’s least expensive prepaid plan is $45 and includes unlimited talk, text and 20 GB of data. These are the plans that have no extra perks, and we’ll be comparing them to Mint Mobile later.

Why did I choose Mint Mobile? Honestly, Mint Mobile is a T-Mobile MVNO or mobile virtual network operator. Without getting technical, this just means that the service uses T-Mobile’s network infrastructure without roaming access to the Verizon or AT&T networks. So if you’re in an area with only Verizon or AT&T towers, then you won’t have service. Not the biggest deal, if you’re not regularly in areas with few cell towers. For me, that meant identical service. It’s not like I was switching to a company that used Verizon towers, like Visible, or AT&T towers, like Cricket. I knew what I was getting into with the T-Mobile infrastructure. 

Taking the step to finally switch from T-Mobile was difficult, honestly. I enjoyed the perks that came along with the service. I was eligible for free Netflix, Apple TV+ and Paramount+ options on their Magenta Max plan, meaning I didn’t have to pay for those services. Verizon and AT&T also offer similar streaming benefits. Seems like T-Mobile and other top carriers win when it comes to perks with add-on services, but when you do the math are you really saving any money?

Mint Mobile has no perks, but that’s a good thing. Stripping the fluff from the cell phone plan keeps prices low. On top of that Mint Mobile has no brick and mortar locations, so the company doesn’t have to pay rent for the facilities, again keeping costs low. They also don’t pay for the physical infrastructure like cell towers, instead renting bandwidth space from T-Mobile.

What does Mint Mobile have? To put it simply, Mint Mobile is a no-frills cell service. You get unlimited talk and text on all of their plans, and the only choice you really have to make is how much data do you need? Currently, they have options for 4 GB, 10 GB, 15 GB and unlimited (throttled at 35 GB). Prices range from $15 to $30 per month, depending on the plan you choose. That’s it. No add-ons for extra services that you may not even use, but still have to pay for. Mint Mobile offers plan options for 3, 6 or 12 months. Choosing their 12 month plan offers their lowest price options. I have the 12 month 4 GB plan, which after taxes and fees came out to be about $200 for the year, or under $17 per month. Keep in mind that you will be paying for the entire plan upfront, but then you no longer have to worry about a monthly cell phone bill. My home needs two cell phones, so my yearly cost is about $400. Compared to the almost $100 per month ($1,200 per year!) thatI was paying for T-Mobile. I’m incredibly happy with the switch to Mint Mobile. I’ve had their service for over four months now and haven’t had any service interruptions.

I happen to live in Florida and live in the path of the recent Hurricane Ian. Now, my area wasn’t hit directly, so I’m thankful for my family’s and my safety, but we did get hit with hurricane force winds and lost power and internet for some time. I was reliant on my cell phone to be able to keep updated with the weather and info from our local electric company. At no point during the outage did my speeds drop until I ran out of data. I ended up using up my 4 GBs during that time from browsing Reddit too much, so that’s on me. I could have bought additional data, but I didn’t want to. When I did run out, it was practically unusable when trying to watch YouTube or browse Reddit, but still useful for sending iMessages and slowly checking emails. I’m not the kind of person who gets upset from super slow loading speeds, since I’m old enough to have used dial up internet as a kid. Anybody remember NetZero? I also understand that the internet, though a necessity in the modern world, is kind of a luxury when it comes to basic needs. We don’t always need to be online and on our phones constantly, but that’s a topic for another day.

Switching to Mint Mobile was easy. Buying the service is simple enough through their website or app (using my referral link! http://fbuy.me/tHV1l), and they’ll mail you a SIM card. If you want to keep your phone number, you’ll need to keep your current service active and have your current cell phone account number, transfer PIN number and billing ZIP code to transfer your number. Your carrier can tell you the transfer PIN number and will unlock your phone, if you call and ask. Put your new Mint Mobile SIM card in your phone. Use the Mint Mobile app and follow the setup steps to input the transfer information and set up your service. That’s all! I took me less than 10 minutes to set up my phones.

Again, I’m happy I made the switch to Mint Mobile and I think you should, too! Please use my referral link to sign up and you’ll get $15 credit to use when you sign up. Savings on savings. Go to http://fbuy.me/tHV1l to start saving on your mobile phone bill.

Question of the episode:

Do you have one of the top cell phone carriers T-Mobile, Verizon or AT&T? Why do you have them when there are other, less expensive options out there? I’d love to hear your reasoning! You’ll receive no judgements from me, remember, I was a T-Mobile customer for over 20 years! I know how hard it is to make the switch. Please leave a comment below.

The post $15 Cell Phone Plan Mint Mobile Review – CCS008 appeared first on Common Cents Saving.

The act of budgeting is taking a microscope to your finances and really analyzing your spending habits. What are the unnecessary things? Maybe that cup of Dunkin or Starbucks every weekday morning. Maybe we need to curb that Amazon shopping habit. Maybe there are other ways we’re able to cut back. What are the necessary things? I’m sure most of us have rent, utilities and groceries to budget. Maybe we have medical expenses or debt to pay off. Minimizing unneeded spending is crucial to reaching any financial goals. I’d like to think we’re all here because we have money goals, or at least the desire to get a hold of our finances. 

Being frugal, in my opinion, implies that you are intentional with your money and possibly even have a plan to save that money for a future purpose. Being frugal doesn’t necessarily mean living a miserly lifestyle and being cheap with your money. You also don’t have to be a minimalist to the point where you’re sewing the holes in old clothing instead of just buying something new. You can still be frugal and have nice things. Frugality, like many things in life, is about balance. We try to save as much as we can, while still living comfortably. 

Let’s keep in mind that we have financial goals to reach. My long term goal is to eventually be financially independent and hopefully retire early. It’s a long stretch, but I’ve spent too much time on YouTube and I’ve drunk the financial independence Kool-Aid and I want that life for myself. It’s going to be difficult, but I know that’s the direction I’m headed. My short term goals are ever-changing, but currently it’s to backfill my emergency savings that I talked about in the last episode. 

Budgeting, though a huge part of what this podcast is focused on, is only one piece of the overall personal finance pie. We won’t talk about all the pieces today, but a few things to keep in mind as you begin to figure things out is your emergency savings, monthly bills and retirement. You may not think you have the ability to worry about retirement or plan have investments, but we are all capable of more than we realize.

For some of you, maybe your reason for budgeting and being frugal is just so you can make the bills every month. Maybe some of you want to save for a car repair. Maybe you have medical expenses like medication and appointments to budget. Maybe you have debt to pay off. Whatever your reason, always keep your goals in mind when you need to make any sort of financial decisions.

The journey of frugality can mean different things to us, even though we’re all doing about the same thing, which is saving money.

Question of the episode:

What are your reasons for budgeting or being frugal? Do you have any specific short or long term goals?  I’d love to hear from you, so please leave a comment below.

The post What budgeting and frugality means to you – CCS007 appeared first on Common Cents Saving.

We’ve taken a few steps so far to get to this point. We’ve picked the kind of budget we want to use. Personally, I’d go with the zero based budget, so that’s what I’ll be using for all my examples. We’ve discussed removing debt, it’s only going to weigh us down. We talked about starting an emergency fund, and though the emergency fund may not be fully funded at this point, it’s time we set up a sinking fund so we don’t have to pull from our emergency money. 

Just like we did with emergency funds, let’s define what a sinking fund is – a sinking fund is money you put aside for future irregular expenses. Some examples of irregular expenses are: your car insurance bill, if you elect to pay it every 6 months; home or car maintenance; doctor or dentist appointments; a holiday gift fund; or even your tax bill, if you’re self employed. These are bills that you’ll pay at some point throughout the year, but not necessarily on a monthly basis. Your car insurance bill may not be due for 6 months, but you’re still going to want to have the money set aside to pay it when it comes due. This is how we do it.

In order to set up your sinking funds, you will have to assess your previous year’s expenses. Like we did in episode 1, “A financial foundation for the future” we need to gather our bank and credit card statements. What irregular expenses did we have last year? Find anything that isn’t a normal monthly expense. To find your minimum irregular expenses for the entire year, make a list and add them together. This is your yearly sinking fund number. A goal to reach to build the next tool in our arsenal. Take the yearly total and divide by 12 for each month of the year. This is your monthly sinking fund number. The idea is to pay yourself this amount every month to help keep ourselves afloat when those particular expenses arise. Since we’re “paying” ourselves every month, the sinking fund will continually be replenished. When I say “pay yourself,” I simply mean transfer the money to a different account to pull from when needed. I use the savings account my bank gave me when I set up my checking account for my sinking funds. As for my emergency fund, we talked about using a separate online high yield savings account to keep the money out of reach, so we’re not tempted to use it.

Sinking funds are versatile and can be used for any kind of future expense, as long as you know how much you will need for it when the time comes. I like to include extra things like clothing and video games in my sinking funds. I’m pretty frugal and don’t spend much on clothes and games. I give myself a limit of how much I allow myself to buy in a year, and I set aside a small amount each month through the sinking fund. This way, I don’t feel guilty when I want to buy something for myself.

Question of the episode:

Do you use sinking funds? Are you going to start a sinking funds budget, now that you’ve learned about them? I’d love to hear from you, so please leave a comment below.

The post Use sinking funds to keep your finances afloat – CCS006 appeared first on Common Cents Saving.

If you’re in debt, getting out of debt can sometimes feel impossible. It’s easy to talk about paying off credit cards or loans, but the path to becoming debt free isn’t easy. The simple answer is consistency. Imagine your debt as a mound of dirt. If you want to get rid of the dirt, and all you have is a shovel, you’re going to have to do it one shovelful at a time. It’s hard work. It’s not fun. You’ll get there eventually, but it’ll take a while. The feeling of finally being rid of the dirt (or debt) is the fun part.

We can move this dirt pile by using some of the methods we’ve already talked about in past episodes. The easiest to do is lower your expenses. We talked about building a budget in episode 2 “3 Simple Budgeting Methods.” Budget for the bare minimum and use what’s leftover at the end of the month to pay down debts. A second, more difficult method is to increase your income. Can you get more hours at your job? Are you able to find a second job or a side gig? There are many different ways to utilize skills that you may have to your financial advantage. Another solution from a previous episode is using your emergency savings. Do you have an emergency fund? Can you use some of it to get rid of some or all of your debt?

I understand these solutions may not be for everyone. Sometimes we just don’t have time for a second job. Sometimes we don’t have the resources to enhance our skillset. Here’s where I personally fall back on the “shovel” method from our earlier analogy. Consistent payments of as much as you can, hopefully more than the minimum payment, and you’ll get there.

If you’re listening to this and you have no debt, good for you. Stay there. Don’t go into debt in the first place. There are situations where you can take advantage of certain kinds of debt, like having a credit card for the points or using a loan to start a business, use for an investment or pay for your education. That’s topic for another time.

If you do need to go into debt for any reason, have a plan to get out quickly. Plan a weekly or monthly payment and consistently pay it down until it’s gone. If you need to open a new credit card, see if they have a zero percent interest period for new customers. This way, you won’t have to spend extra in interest payments.

Debt is like tying an anchor to yourself and attempting to swim. All it’s going to do is weigh down your progress and keep you from reaching your goals. 

Question of the episode:

What are your experiences with debt? Are you currently in debt? Or have you paid off a large amount before? What methods did you use? I’d love to hear from you, so please leave a comment below.

The post Digging your way out of debt – CCS005 appeared first on Common Cents Saving.

What is emergency savings?

Let’s define emergency savings. The Consumer Financial Protection Bureau defines emergency savings as “a cash reserve that’s specifically set aside for unplanned expenses or financial emergencies.” I’d rather attempt to be as prepared as possible for the unforeseen, but things happen. Life… uh… finds a way.

Emergency savings are for exactly that – emergencies. In this situation, an emergency is a lost job, a car repair or a home repair. Hopefully temporary situations, so that you utilize the savings as a safety measure to get you financially through things. For clarification, this emergency savings is not meant to be used on a future large bill, like your semi-annual car insurance bill. Emergency savings is not meant to be used on the latest phone or game console that you didn’t budget for ahead of time.

How to fund your emergency savings

In previous episodes, I’ve talked about making a budget. The best budget is useless, if you’re not living below your means and saving every extra dollar. Building the emergency savings may be a challenge, if you’re starting from zero and don’t have much room in your budget outside necessary spending. Consider getting a second job or finding a higher paying job to stash money away. I don’t mean to make finances sound simple, as I am fully aware money can be difficult for many people, but there are many different pathways to financial success. Start small and grow from there, even if you’re putting $5 away every month. If you’re financially able to contribute to retirement accounts and don’t have any emergency savings, consider pausing investments while you save. If you have plenty of room in your budget, also consider making it a new line item, so you’re always putting money away without thinking about it.

To start, set a goal of saving $1000. Then, set your next goal of saving one month’s worth of expenses or income, whichever you prefer. Setting realistic goals will eventually get you to your desired savings amount. It is usually recommended that you save three to six months’ worth of expenses, but your amount is up to you. Once you hit your savings goal, there’s no need to continue to add to it unless you feel like you need to make adjustments to your financial situation. My personal preference would be to save about one year’s worth of expenses.

Where to put your emergency savings

Keep your emergency savings away from your normal checking and savings account, so you’re not tempted to use it easily. This money is meant to be your safety net, and not meant to move around a lot, but you still want easy access to it whenever you may need. Keep the savings in an online high yield savings account or money market account. High yield savings accounts and money market accounts offer better interest rates than a traditional savings account. Money market accounts have a minimum balance that you need to keep, while a high yield savings doesn’t require a minimum balance. Both high yield savings and money market accounts allow you to access your money with a debit card, but limit your monthly transactions. I prefer to use use an online high yield savings for my emergency savings.

Why emergency savings is beneficial

Emergency savings is beneficial for a handful of reasons. It allows you to stay out of debt when an emergency arises. Your credit card limit is not your emergency fund. I’ll talk about credit cards in another episode, but there is a right and wrong way to use credit cards. Using a credit card for an emergency without having savings to pay it off can lead to additional financial stress. I also mentioned earlier that your emergency savings can make a stressful situation less stressful, since you won’t have to worry about finances.

Question of the episode:

Tell me your thoughts on emergency savings. How much do you put away? What kind of account to you keep it in? Have you had to use yours recently? How do you replenish it, if you have to use some? Please leave a comment down below.

The post Plan for the worst with emergency savings – CCS004 appeared first on Common Cents Saving.

We’ve talked about the importance of creating a budget and some of the budgeting methods we can use. This episode, we’ll talk about some of the thoughts we have about money and how we can change them for the better.

Know the difference between a want and a need.

Sometimes something you really want can be staring you in the face at the store, and you may feel like you need it right now, but do you really? Will that item benefit your life or make a task easier?

Any money spent on a want is money that truthfully doesn’t need to be spent at all, but we’re human and desire gratification. If you really want something, then there are a few things you can do to obtain an item much easier and have it be less stressful on your wallet and your savings goals.

• Stay away from brand name items. Think about what you’re buying. This can be at a department store or the grocery store. Brand name items, for the most part, are generally overrated and overpriced. I’m not saying to buy low quality, I’m saying to not allow the name of some multimillion dollar company dictate what you buy. This can mean shopping second hand for clothing or furniture, since a consignment shop or thrift store won’t have the ridiculous department store prices. Shopping at outlet stores for clothing or household items can also be less financially stressful. When grocery shopping, picking store brand items over brand name items can help minimize your food budget.
• Know what you can afford. Just because you have just enough money in your bank account to buy that latest video game doesn’t mean you need to buy it. There are two sayings I like to think of when changing my mindset about money. First is, “Just because you can, doesn’t mean you should.” Just because you can afford that $100 item because you have $110 in your bank account, doesn’t mean you should spend all your money on it. The second saying is, “If you can’t buy 10, then you can’t buy 1.” If you can’t afford 10 of the latest hit video game console, then you probably shouldn’t buy one until you can. This doesn’t mean don’t buy food when you’re running low on money, necessities are different.
• Patience is key in all journeys. It sucks, but you don’t need the latest iPhone on launch day. Delaying gratification can do wonders for your budget. If you can survive without ever buying a specific item that you don’t need, then great. If you really must have the latest toy or hot item, then I highly suggest to budget for your wants. There are a few ways we can approach this – we discussed them in the last episode. There were the percentage budgets, envelope budgets and the zero based budget that you can choose from.
  • A quick reminder when budgeting for wants:
    • Assign a percentage of your income to wants
    • Set aside an envelope with $10 every month until you reach your goal
    • Add a category to your zero based budget to allocate money every month until you reach your goal.

You will be able to buy your wants guilt-free, knowing you have the money set aside while you’re still putting money towards your savings goals.

The post Money mindset changes – CCS003 appeared first on Common Cents Saving.

Percentage Budget Type

Using your take home income number, section it out into categories, depending on your preferred method.

The 50/30/20 plan allocates 50% of your income to your expenses, 30% to savings and 20% to wants. You can adjust this budget to your liking. Maybe you want to allocate 30% to wants and 20% to savings, it’s up to you.

These kinds of budgets are great for you to take your total income each month and allocate it easily. No need to think about lots of categories or bill due dates. 

The 60% Solution budget allocates 60% of your income to expenses and 40% to everything else. The 40% is split in four ways; 10% to retirement, 10% to long-term savings, 10% to short term savings and 10% to wants. Again, these can be adjusted according to your liking.

These are good budget methods when you have a high income. I’d guess that most average people can’t pay all of their expenses with 60% of their income, let alone 50%. I can see why this kind of budget can be beneficial to some like those with extremely low expenses or those with large incomes.

Envelope Budget Type

There are different types of envelope budgets, those that use physical cash in envelopes and those that use apps to help track a digital set of envelopes or categories. I’ll start off by saying that I am not a fan of handling cash, but I won’t deny that it works for some.

For this type of method, you’ll need to know details of your expenses. You need to break up your spending into categories and bills. You will have an envelope for every spending category – rent or mortgage, groceries, electricity, gas for your car, etc. Put in each envelope what you think you’ll need for that category. Some will be easy, like your rent, as it shouldn’t change month to month. For more complicated categories like groceries or dining, take an average of previous months’ totals. Use an envelope for a particular category until you’ve run out of money in that envelope for the month, then you can no longer spend money on that category. I’m simplifying things a little, but you get the idea.

There are apps that can connect to your accounts and do this digitally for you, if you don’t like handling cash. I don’t like connecting my accounts to these services, but it’s easier than getting cash and stuffing envelopes monthly. If it works for you, then great.

Zero Based Budget

This is my favorite method. The zero based budget is simple: start with your total monthly income, then subtract each monthly spending or saving category until you hit zero. In my opinion, this is the best way to manage your money. You will be able to monitor each dollar that you spend.

For this example, say you earn $2500 per month. Categorize your monthly expenses. Categorize your monthly savings. Then subtract accordingly until you’re out of money. 

The zero-based and envelope budgets can work well when you want to set mini budgets and control each category every month. Multiply everything by 12 months, and you’ll know your budget for an entire year. Imagine knowing exactly how much you’re going to budget for your expenses for a whole year. Having this kind of information can be powerful.

There are also apps you can use to make this an even easier process, but I highly suggest making your own, so it’s more personalized. Make something hand written or in a computer spreadsheet. I can go over my personal budget and spreadsheets in a future episode. I’ll tell you that I use a combination of a zero based budget and a digital envelope system for my personal budget.

I treat it like a game. I do my best each month to come under budget for each possible category. The less I spend in a category, the more I have leftover for saving that month. Of course, there are months when I do go over budget in some categories, but I do what I can to prevent that from happening too often.

Budgets can be as complex or as simple as you like. It’s your personal plan. Make it yours. I like to monitor both my monthly and yearly bills and even discretionary spending on clothing or video games. Nearly every time I spend money, it has its own category.

The post 3 simple budgeting methods – CCS002 appeared first on Common Cents Saving.

Let’s lay down the foundation to everything I’ll be going over. The assumption going forward will be that this step will be completed and is maintained monthly. If not for this basic step, then none of the future things I’m going to talk about and implement will work. 

The foundation I’m talking about is having plan… a budget. I like to think of a plan and a budget two sides to the same coin. A plan shows you what you want to achieve. A budget shows you what are are currently capable of achieving. They form a symbiotic relationship, so you can’t have one without the other. Creating a budget can help put plans into realistic terms, so that you can adjust your life accordingly.

I’ve tried to hold myself to some sort of budget for as long as I can remember, but only started putting it to practice for the last three years. I didn’t really think of everything when first making my budget. I continue to learn over time, and adjust my spending when I need.

When building a budget, you’ll need to ask yourself a few questions. How much money is coming in? How often and when do I get paid? How much money am I spending on things I don’t need? What are my bills, when do they post and when are they due? These kinds of questions and more will help you understand your personal financial situation.

At its simplest, you need to find out what’s coming in and what’s going out. If you’ve never created a budget before, this can take some time to figure out. If you’ve never stuck to a budget before, this can be a difficult adjustment.

Gather Your Information 

First, find your bank statements. Do you use credit cards? Find all your credit card statements, too. Print or download each statement from the last year, if possible. We need the information. Analyze and record what is coming in and going out. 

Budget and Plan

The reason I’m building a budget is to find the lowest amount of money I need on expenses, to live frugally, in order to save as much as possible. Living beneath your means is incredibly important regardless of how much money you earn. If you spend more money than you bring in, that can be a huge problem.

We’re not creating a budget at this point, at least not in this episode. We are analyzing our spending habits and behaviors. We are also going to come up with our financial plan. The idea here is to find out what your money is doing and what you’re going to do with it. If you don’t know what your money is doing, you will not have any control over your financial situation. This is how we take control. 

Do you have any goals that could cost money in the future? Maybe you’re planning a trip. Maybe you’re buying a car or a house. Maybe you have an expensive hobby. Or maybe you just like going out for dinner every night. Whatever your plans and goals are, life costs money. 

I’d suggest to write things down, if this is your first time. Lay it all out. What is your monthly income? What are your monthly expenses? What are you spending on that you probably don’t need to be spending on? Categorize them, if you need to. We will talk about putting together a budget in a future episode. For now, just find out how much you have coming in compared to how much you have going out. Hopefully you have more coming in than going out. Like I said, living within your means is important. 

Will Power and Action

If taking control of your spending is not something you’ve thought of before, it can seem like a daunting and even boring task. I didn’t say this will be easy, but it will benefit you for the rest of your life. It only takes a few minutes a day once you’ve set everything up. The key is consistency. It’s not going to be fun, but you’re going to have to stick to the budget you set. If you don’t keep this up, you will regret it.

As I said, I’ll talk about different types of budgets and make a budget with you in future episodes.

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