Operation: Budgeting

Ugh.

That's what I think when I start thinking about budgeting.

Ugh, ugh ugh.

It's not fun, it's not easy, it's not glamorous. But, it's necessary. I know for me, getting started was the hardest part. Now that I have a process and know exactly where my money is going to be at any given moment, it's much easier to keep my spending in check. But those first few months of paychecks and arbitrary spending were brutal.

This isn't necessarily instructions as much as it is Katie's Guide to Budgeting Success. What works for me may not work for you. As some background info, I get paid twice a month via direct deposit into my checking account, I pay my credit card bill once a month out of my checking account, and I pay rent and utilities once a month.

Step 1: Create an account on Mint.com and put in the time to categorize your expenses for the last 3 months. Mint will create categories for you or you can create them on your own, and then you can see your average spending for those categories. This helps you budget realistically. It's easy for me to say "I am going to spend $50 at the grocery store a month" but the reality is, I was spending $200. Re-working my budget was the first step to success.

Step 2: Determine how much of your take home salary you would like to save. I currently have 50% of my take-home salary immediately transferred into my savings account. That doesn't mean it stays there, because I don't think I can live comfortably on 50% of my salary, but by not having it immediately available in my checking account I am more aware of my spending habits.

Step 3: I have all my paycheck deposited into my checking account, but the Monday after my paycheck goes through, I have either 1/3 or 2/3 automatically transferred into a savings  account.

Step 4: Set up all your monthly payments to be deducted automatically. I have set up my rent payment to be mailed on the 1st of every month. I have a payment set up to pay a certain amount towards my credit card bill monthly. Sometimes this is an overpayment, and sometimes it's an underpayment. However, it's my target amount for what I have budgeted to spend monthly. I pay my utlities and my rent at the same time, but you can do the same with utilities, and any other expenses you know you will incur on a monthly basis.

Step 5: Calculate your monthly take home pay, and subtract out what you have budgeted for. For me, I would subtract the amount I pay towards my credit card bill and my rent/utilities. The rest of that money is what I am actually saving.

When I signed up for Mint.com, I created budgets and I know what they are for various categories (grocery shopping, dining out, nails, hair, car repair, travel, etc). I put all of my purchases on a credit card, and the amount I pay towards that each month is what I have budgeted total for all of my expenses. So, even though I didn't spend $100 on traveling in January, I included that in my budget, because I did budget to spend $300 every 3 months.

What about you -- how do you budget? Do you have a spreadsheet? Do you keep track of your spending at all? Do you feel like you are constantly reigning yourself in, or do you spend exactly how you want and still maintain a good budget for yourself?

I'm so curious how other people do it! I know I am constantly checking myself and forcing myself to dig a little further into the freezer rather than going out, or finishing up an old bottle of lotion before going out to buy a new one. So share with me your budgeting tips and tricks!

 PS - I have a jar exactly like this that I keep all my spare change in! It came from one of my best friends from middle school! Does that make me a packrat? It's always sat on my dresser, for as long as I can remember! My friend wrote little notes on pieces of paper outlining all the "blonde" things I did. I guess saving money isn't necessarily blonde, but I'm excited to see how much $$ is in there when I finally empty it out!