Budgeting has become somewhat of a lost art in our society. Over time, the word “budget” has developed a negative connotation – as in, if you’re on a budget - it is associated with deprivation. Most people see making lots of money as a license to spend freely, and making little money as having to watch more carefully what we spend. But what if I told you that EVERYONE should budget?
I have to confess, even with a background in Accounting and Finance, I have often resisted budgeting for my own household, because it seemed like a lot of work! In all actuality, budgeting is very simple AND it can bring MORE freedom and LESS STRESS to your spending habits. Whether your household brings in $500,000 or $25,000, budgeting could be the tool that helps you acquire wealth for your family. (Or maybe, as a starter, just helps you sleep better at night!)
Where do I start?
Being self-employed presents a unique challenge in budgeting due to the fact that a self-employed person’s income can vary greatly from month-to-month or season-to-season. If you aren’t already using some sort of financial tracking software for your business you need to start NOW! (Photographer Depot has a great spreadsheet that is inexpensive and easy-to-use here) Spreadsheets or other software allows you to see trends and make decisions based on past history.
Once you have an estimate of your monthly income, there are several tools available that you can use to allocate funds to different categories. I really like using Dave Ramsey’s guideline percentages. Here are his recommendations:
* Charity – 10-15%
* Saving – 5 – 10%
* Housing – 25-35%
* Utilities – 5 – 10%
* Food – 5 – 15%
* Transportation – 10-15%
* Clothing – 2 – 7%
* Medical/Health – 5-10%
* Personal – 5 – 10%
* Recreation – 5 – 10%
* Debts – 5 – 10%
(You can download a free printable from Pretty Presets here to help you fill these items in!)
Once you get started, keep these few tips in mind: (also from Dave Ramsey)
* Give it three to four months to start working. It won't be perfect the first time you do it.
* Spend every dime on paper before the month begins.
* Over-fund your groceries category. Most people underfund that category.
* Husbands (if applicable) need to loosen up and quit using the budget as a whipping tool on their wives.
* If married, spouses need to do the budget together. The preacher said "... and you are ONE."
In the same way that eating healthy helps you say “no” to things that aren’t good for your body, with the freedom to enjoy a treat occasionally, budgeting will allow you to say “no” to the things that aren’t financially healthy. It will also save you from “buyer’s remorse”; when you’ve budgeted for an item, you can buy it and enjoy it!
Dave says budgeting is 20% belief and 80% behavior, so make a plan on your calendar to actually SIT DOWN and give this a shot! We’d also love to hear how budgeting has brought some freedom in your finances!
Shannan Painter is a newbie photographer who has spent the last 5 years working with the left side of her brain helping small businesses organize their accounting and taxes. She decided to take the big step and pursue her dream of becoming a professional photographer in 2013 after adding a third boy to her house that was already full of super heroes, trucks, and sports equipment. She and her husband, who is a local TV meteorologist, play pick-up games of basketball in their free time and like to take road trips to Lake Minnetonka with all 3 boys, and their dog Growler.