Etsy — CrossbowPlannerCo

We know that budgeting is one of the most important personal financial tools. However, a budget might feel too restrictive, or might feel like a short-term solution to a lifelong issue. We’re here to provide some #budgetinspo. From tips to formulating a budget, implementing a budget, and adhering to/adjusting a budget, we’ve got you!

Getting Started

We first recommend sitting down and understanding your total income. Adjust for taxes, social security, automatic deductions for retirement accounts/insurance/other benefits. You want to understand your net income, which is the amount of money you physically take home (after the aforementioned deductions).

Once you’ve established the money you expect to bring home monthly, you can begin implementing the 50/30/20 rule, which is as follows:

- 50% of your monthly income should be dedicated to necessities. You determine what constitutes a “necessity,” but think along the lines of rent, utilities, groceries, car insurance.

- 30% of your monthly income should be dedicated to wants. “Wants” include going out to eat, a weekend get-away, or a piece of jewelry you’ve been eyeing on Etsy. You have agency here; if you’re trying to have a no-spend month, then this 30% might be 5 or 10%. You can adjust the spread of money depending on your needs and financial goals.

- 20% of your monthly income should be allotted to paying off debts and/or saving money. If you have an outstanding credit card balance, student loans, a mortgage, or if you’re trying to save for a trip/large expenditure, this is where the final 20% is allocated. Again, use your discretion. You can adjust each category as necessary, but we recommend keeping necessities at at least 50% of your income.

It might be useful to create a spreadsheet in order to characterize expenses. For instance, you might not have rent or utilities if you’re living with your parents, but you might have a hefty student loan payment. Perhaps you want to dedicate 50% of your income to paying down that loan. Feel free to adjust the categorization of the budget — it’s a tool meant to help you, not hinder you.

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Maintaining the Budget

After planning, executing your new budget is the next challenge. You might want to plan for a given amount of time to stick to the budget,i.e., six months or a year. You also want to begin with intentionality: introspect about why you’ve decided to start budgeting, what you hope to achieve, and the ways you plan to stick to the budget. A goal--or a set of goals--will help you to adhere to the guidelines you’ve set for yourself. For instance, maybe you want to travel abroad or want to completely pay off a line of credit by a given date. These are tangible, consequential goals for you to reach. That way, when you’re tempted to splurge at your favorite store, you can think about how your current spending will be impacting your future self and her spending.

We recommend a budgeting app or some way to track your expenses. The Wall Street Journal has a fantastic article detailing the pros and cons of different budgeting apps. Some apps, like YNAB, require you to detail every expense detected on your credit and debit cards. YNAB is completely immersive and relatively strict; if you know that you’re likely to slack off, we recommend an investment like this. If you don’t want the budget execution to be as immersive, Nerd Wallet offers different templates to track monthly spending. This is a more hands-off, lenient approach to budget tracking. You detail how much you want to allocate to each expense and manually track how much was actually expended. If this is your first time implementing a budget, we recommend a more immersive experience, just for accountability’s sake.

Tips for Budgeting

1. Use “loud budgeting.” Announce that you’re on a budget! Be transparent about your goals, your spending habits, and the changes you want to make. Recruit your family and friends to join you: again, for accountability, but also because camaraderie makes reaching goals that much sweeter.

2. Don’t be afraid to adjust! If you find that your current budget is too restrictive, that can be just as--if not more--destructive to your finances than no budget at all. Account for “cheating” in your budget. Wiggle room accounts for life: for the days you don’t feel like cooking, for the sale you can’t pass up. It’s more likely you’ll stick to a budget long-term if it isn’t too restrictive.

3. Check in with yourself! Is it easy for you to inventory and adjust your spending habits? Why do you think that might be? What is something you’re struggling with? What’s something you find easy? Once you’ve changed your budget, what’s something you’re doing now that you want to continue doing?

Have fun, be loud, and spend wisely!

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