Thursday, July 29, 2010

Create a Budget: Step 5

The first step to financial health is to create a budget. Here are some mini-bites to begin creating a budget that works and you can live with.

5. First Things First

Sometimes, after we women see our expenses approach or exceed our income, we freak out. We immediately go into Bag Lady Fantasy Land. The stage gets gray and blurry adorned with sad violin music in the background and police sirens wailing in the distance. We picture ourselves wearing dirty, tangled hair and accessorized in a raggedy afghan pushing a grocery cart filled with aluminum cans down a stench-soaked street or perhaps timidly holed up in a cheap apartment wondering how we will be able to live, eat, protect ourselves, and feed our stray cats. I have found that this anxiety dissipates when we put things in perspective and practice better deciphering what is a need and what is a want.

Here are the 6 things that are essential to address in your budget.

1. Tithing
"But seek ye first the kingdom of God and his righteousness, and all these things shall be added unto you." (Matthew 6:33; 3 Nephi 13:33)

2. Savings
"After we have paid our tithing... and other Church obligations, we should set aside money for savings. Church leaders suggest we try to save as much money each month as we pay in tithing—in other words, 10 percent." (Relief Society Courses of Study, 1977–78 [1977], 56–57.)

3. Home & Utilities
Everything that keeps you in a home. Rent or mortgage, lights, heat, etc.

4. Food
Good food to keep your body and mind functioning well but this does not translate into filet mignon, organic everything, and Martinelli's every night. (Martinelli's? We're CLASSY like that!"

5. Basic Clothing
Clothes to dress appropriately for your lifestyle and protect from the elements. This does not equate to shopping every sale in town just because it's "such a good deal!"

6. Transportation
Whatever transportation that is necessary for income and/or schooling, whether it's a car, a bike, a bus pass, or a sturdy pair of walking shoes.

Use a highlighter to mark the things on your print-out that fall into these six categories.

You may have noticed earlier when I showed you my categories that some of them are in green. That's my "highlighting" in Excel the bare minimum essentials in our family. Notice most of the categories in our budget are not essential, even stuff that is truly important (i.e. retirement or emergency preparedness).

. . . . . .

The reason I leave them in color is so that if ever we should be in a situation where we have to drastically reduce our expenses, I will remember that we are fine as long as we have the items in green. Everything else in black is up for slashing.

Add your highlighted essentials together and then subtract the total from your total income.

NICE! You can breathe now because you can see that you can afford all you NEED. You also see how much you have left for things that are not necessary for survival. Awesome!

So even if your Budget initially sent a message like this:

Now, it says something like this:

Aaahhhh... Breeeeeathe! Give praise to the Lord who provides all we need!
28 And why take ye thought for raiment? Consider the lilies of the field how they grow; they toil not, neither do they spin;
29 And yet I say unto you, that even Solomon, in all his glory, was not arrayed like one of these.
30 Wherefore, if God so clothe the grass of the field, which today is, and tomorrow is cast into the oven, even so will he clothe you, if ye are not of little faith.
(3 Nephi 13)

If you are married, I recommend you take this information back your spouse and give him a BIG KISS for helping provide all of life's necessities for your little family. If you are not currently married, kick your feet up, put your hands up behind your head and say, "Aaahhh... Good job, girl!" Just sit there and enjoy feeling... safe.

For the rest of this step, take a look at the things you have: a home, food, clothes, and a way to get around when you need to go out and gather berries or slay some meat. Smile and be grateful that you are blessed!

The next step will have its own post on Monday. Enjoy Frugal Friday tomorrow and the weekend to reflect on and express gratitude for your many, many blessings!

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