A budget at its core is a sum of all of your “ins and outs” and the goal is to get to $0. In this equation each one of your dollars is assigned to a job. When you assign your dollars a job, your money works for you to reach your financial goals. Before all of that, there are several questions you must ask yourself and the answers will assist you in building your budget . 

Is your income variable, fixed or mixed? 

To start budgeting you have to know what your income will be every month. There are different forms of income and your budget will depend on which type of income you earn. 

Income Number One: Fixed. In most cases this is salary based income. You know how much you are slated to make for the year (or season). You can predict down to the penny how many dollars are going to hit your bank account every two weeks. This is the easiest form of income to budget for because there is no guesswork required. You have a known starting point to budget from. 

Income Number Two: Variable. This type of income has more variables than just showing up to work (or the field). For example, if you are an esthetician your income depends on how many clients you get and you may have busy seasons where your income is high and slower seasons where your income is less. The key to budgeting with variable income is to be conservative and set goals.

Income Number Three: Mixed. Almost all of our baseball significant others will fall into this category. This is part of what makes our lifestyle unique and let’s be honest...a pain in the butt. With mixed income you have a fixed portion of your income and a variable portion. In baseball, this usually breaks down as 1) Spring Training “living money” 2) Season Salary 3) Off-Season Side Gigs. 

What are your expenses? 

Before budgeting you must know your current spending habits. Determining current expenses is  the step of budgeting most people dread. There are several ways to make it a little less painful. My two favorite methods to do so are: 

Look back at old bank statements - the numbers do not lie. Grab a glass of wine and sit down with your last three months of bank statements. Bonus points if you get your significant other to sit down with you. Start with your automatic payments - mortgage/rent, utilities, insurance, car payments, student loan, gym memberships, netflix subscriptions, etc...List these out along with the date that they are debiting your account. Next look for common themes - Starbucks runs, grocery purchases, Lulu splurges, gas charges, etc... 

Track your spending for a month - use a google sheet or cute notebook, whatever your preference. I love google sheets because you can access from your phone. Every time you swipe your debit card enter it into your tracker along with a category - housing, food, entertainment, transportation, etc… This method takes some discipline to stick with but I like it because it forces you to take an active role in your budget. 

It’s important to not get discouraged during this process. I guarantee you are going to shock yourself but that is ok, you cannot fix a spending problem when you do not know you have one. My husband never realized how much he was spending on food until I showed him how many times Chipotle showed up on our bank statements and how quickly it added up. 

*Smart Budget Hack: Count Savings as an Expense  

Most people think your savings should just be what you are left with at the end of the month. BUT if you count your savings as an expense and build it into your budget you are more likely to hold yourself accountable to that number. 

What are your financial goals? 

A budget without financial goals is like getting in a car without a final destination. Which way do you turn? Financial goals can vary from saving for a rainy day to paying off debt to making a down payment on your dream home. If you know your goal you can structure your budget to get you there. A financial goal also helps deter you from binge spending when you start to see your savings grow. 

Do you want to be wealthy or appear wealthy? 

This is a question I ask often to keep myself on track when comparison starts to creep in. Baseball is a curious community because the salaries range from $5,000 a year to $5,000 a pitch. All around us there is not only the appearance of wealth there is real wealth - luxury cars, expensive clothes, lavish vacations. However, if you have to sign loans with insane rates and carry credit cards with ridiculously high balances I can almost guarantee the stress that comes with the financial burden will not outweigh the temporary shopping high. Stay true to yourself and your budget and I guarantee you will be more at peace than you would be with any material item. *Steps down from soap box.*

Still Overwhelmed? 

If you are excited by the idea of whipping your financials into shape but also still overwhelmed with how to get started or just have questions, please reach out. I get so much joy from helping others get their financial act together. It is easier than you think!