A Simple Budget
STep 1: Write Down a Monthly Budget
I recommend writing down a monthly budget at the beginning of each month. There is something concrete about pen and paper. I use the monthly budget in my financial notebook. I like it because it includes the expense percentages and reminds me how I want my money to flow. I will be using this monthly budget (as pictured) for the workshop, but you can easily write down the percentages on the printable worksheet as well.
STep 2: Use 10-10-80 Rule
If you look at the top of the budget form, you will notice that this monthly budget follows the 10-10-80 Rule - which simply says that your money should flow into three parts:
I like the 10-10-80 Rule because it reminds me of the most important categories in my budget - tithe, savings, and living expenses.
Step 3: Write down Your Income
Grab your pen, and at the top of your monthly budget, write down your monthly income - this is the total monthly household income after taxes have been taken out (your take home pay). In this workshop, I'm not going to focus in increasing income, because that is not really most of our problem. Most of us need to manage our expenses better, and when we do, we will probably be entrusted with more income.
Your income is like a water bottle. I want you to imagine your monthly budget as a water bottle. At the beginning of each month, your water bottle is completely full of water. This is your income filling up your budget. As you spend on expenses, the water bottle empties.
You have three choices each month. You can either:
Which one do you want to chose? Obviously, we all want #1 SAVINGS! #1 is really good, #2 is bad, and #3 is the worst! So, we are going to get that water flowing in the right direction, right now.
Step 4: Tithe
I love giving, especially when it's inspired and off-the-cuff. God loves a cheerful giver. It is so great to give to others in need. Since God is so giving, I think that when we give we are reflecting him. So, tithe is fun! You should feel passionate about where you are giving. Tithe is that first 10% of your income. This is the first 10 in the 10-10-80 Rule.
On your calculator, click in income number x 10% (or .1)= and write this number down under tithe line.
If tithing is something that you often forget to do, you could go ahead and set up automatic tithe today. You might want to leave a little tithe for the spontaneous, "God-inspired" giving moments.
If you need a few ideas for giving, you might give to:
Where do you love giving? Share in the comments below.
Tip! Another way to remember tithe, is during your weekly tracking. On desk work day, track expenses, pay bills, but make tithe your first "bill".
STep 5: SAvings
Next, write down your monthly savings amount. This is the same calculation as tithe. Write this down right now. Savings is the second 10% in the 10-10-80 Rule. Each week when you sit down to track - tithe first, and save second.
Where should I place my savings? Here are a few ideas in order of importance:
If you haven't already, you will want to open both a savings and retirement account this week and start saving in both monthly! Talk to your retirement broker about IRA's and Roth-IRA's to see which is best for you.
Remember to save in both the savings account and retirement account each month. Savings can also include Car funds, Christmas funds, College funds, etc., but I like to keep it simple.