Congratulations! Welcome back to Week 2 of budgeting fundamentals! Give yourself a pat on the back for coming back and continuing to take action to improve your financial health and chart a new path toward financial success. It is not easy to change or add new habits, which is why I cannot emphasize enough that you should celebrate your small wins along this journey. In the same way, if you didn't complete last week's exercises but are reading this now, give yourself some grace. You showed up, and sometimes that's all that matters. Sometimes life gets in the way, and we lose focus or drop a ball here and there. What matters is that you dust yourself off and continue to put one foot in front of the other. So, keep taking the small steps, celebrate your wins, and don't lose focus on the larger picture.
Okay, you've begun to write down your take-home pay and all your estimated monthly expenses. You did a quick reflection about some of the patterns you noticed and took note of your surprises. If you have no idea what I'm talking about, I recommend you go back and read the article: "Blueprint to Budgeting: Start with an Estimate." It shouldn't take you longer than 5 minutes to read and is a critical first step in the budgeting process. The next step is to check to see how accurate you were. If you get a paper copy of your credit/debit card statement, open it up. If you are tech-savvy, log in to your bank and open up last month's e-statement. A quick tip that I've personally found helpful is to request paper bank statements. Most banks do not charge to send you one, and if they do, it might be time to find a new bank. In practice, getting a paper copy benefits you in two ways: 1. It gives you a helpful physical reminder to check your monthly expenses. 2. What I've found with my clients is that they are more likely to actually look at their monthly expenses and positively adjust their spending behavior.
My two cents: Create another column next to each of your monthly expenses. You can label this column "Actual." For example, "July Actual" if you are doing this for last month. Next to the "Actual" column, create a "Difference" column. For each of your expenses you wrote down last week, write down the actual amount you spent and calculate the difference. What's important is that every expense is accounted for. When you're finished with this exercise, do a quick five-minute reflection: 1. What did you notice? 2. What patterns did you observe? 3. Was there anything that surprised you?
Next week, we'll talk about fixed versus variable costs, discretionary versus non-discretionary spending and how to appropriately categorize your budget. No need to stress about the financial jargon. I'll simplify everything for you. Just stay tuned!
I'd love to hear from you! How helpful was this week's article? Please contact me at jslimitedgroup@outlook.com.
Alternatively, if you're feeling stuck and would like to book a 1:1 session with me, please send me an email at jslimitedgroup@outlook.com or call/text me at (970) 903-3709.
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