Regret is inevitable: we all make mistakes that we wish we hadn’t. But some mistakes hurt a little longer and keep us down a little farther in our lives than others. One of the worst mistakes I made in my first adulting years was how I managed money. I blew thousands of dollars and made almost every financial mistake a girl could possibly make. It threw me into years and years of financial bondage that kept me from fulfilling my dreams and doing the things that really mattered to me.

And you know what? I wish I could tell every single teen and college age girl that you do NOT have to live in that kind of bondage. It’s entirely possible, as my ol’ Financial Peace University instructor would say, to do many things with our money as long as we know that we can’t do everything with our money. Dreams are entirely possible to achieve financially even with a small income! It all starts with a budget.

Today’s guest post comes from the girl who taught me how to budget. She’s one of the wisest financially minded women I’ve known and I just happen to get to call her my sister, too. Almost every wise thing I’ve learned about money was taught by Becca and I’m really hoping you’ll take the time to learn how to make a budget. It was the biggest step forward towards financial freedom that I ever took and I have never regretted keeping a budget since.

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“A budget is telling your money where to go instead of wondering where it went.”
-Dave Ramsey

If you are anything like me, you will have days (or weeks or months) where you’re wondering where that paycheck went. Sometimes, I know that if I don’t have a set purpose for my money, it will be gone before I know it! You know that old saying, that money is “burning a hole in your pocket.” That’s how I am with money if I’m not careful. I have learned over the years several tricks to help me manage my money better; for example, I keep my savings account in a separate bank from my checking account (so I don’t see it right in front of me when I’m checking my balance every week). The biggest thing that has helped me to be wiser about the way I’m spending money though has been making a budget.

When I first started with a budget, a friend-of-a-friend (who was an accountant) helped me to make a budget in Excel. That was over 10 years ago and though the categories and dollar amounts have changed over the years, it is still there helping me to track my money. The purpose of my budget (any budget really) is to show income (money in) and expenses (money out). A balanced budget is the goal—making sure that there is enough income to cover all the expenses. The nice thing about keeping it in Excel is that I can set formulas so it will “auto-sum,” meaning when I change an amount it recalculates my balance automatically. Since it’s so easy to make changes, I am literally in this budget Excel spreadsheet every week to adjust it based on how my actual expenses compared with my planned expenses.

If you are going to make your own budget (whether it’s doing it on a computer with lists or something like my Excel spreadsheet, or even using a pen and paper), my first suggestion is that you make it long-term (at least 6 months ahead). The reason for that is because not all expenses will come up every week, every paycheck, or even every month. For example, I go to the hair salon every 12 weeks or so. It can be a pretty big expense (I like some wild colors with highlights, cut, style, etc.), so it’s better to plan for that ahead of time. Another expense like that is the homeowner’s association (HOA) fee, which is charged quarterly for me. Looking far ahead also helps to get you prepared for things like vacation, planned medical expenses (like my LASIK surgery this year), or Christmas shopping. The further out your budget goes, the easier it is to plan for expenses (even large ones) in the future.

The other big thing to keep in mind when making a budget is that the more specific you are, the better prepared you’ll be. Since I work out of Excel, I use a column for each bill / expense. I have columns for everything from the ‘typical’ bills like mortgage, car payment, and phone bill to other more specific expenses like my hair salon that we talked about earlier. I’ve also got columns for grocery shopping, Netflix, savings account, and even a “Miscellaneous” column. Let’s face it, unexpected expenses come up, and I’ve got to be able to fit those into my budget. This year for me had several unexpected expenses, including Air Conditioner Repair Man. I didn’t have a column for that, but could put that expense into the miscellaneous column to balance my budget.

The last advice I have about making a budget is to keep updating it! I don’t know of anyone that has the exact same income and expenses month after month and year after year. So, make your budget, then keep it going. I hope that you will find it as helpful as I have at tracking expenses, helping you to save, and keeping you knowledgeable about where your money is going.

So, you want to give to the less fortunate and you want to travel and you want to graduate college without being bogged down with years and years and years of financial debt. It’s possible to live free (the way God intended you to live) from debt and to be financially wise even and especially when you’re young enough to avoid the big financial mistakes so many women make. But it all starts with the first step: make a budget.

So, my challenge to you this week is to make a budget. Whether you’re making 20$ a month from an allowance, 100$ a month from babysitting, 400$ a month from a part-time job, or making thousands a month from a full-time career, you need a budget to be financially free. Avoid the trap of financial debt! Make the right choice before it’s too late….