Money Management - Budgeting
Two contrasting and conflicting emotions may arise upon release from a rehabilitation program; hope and fear. While hope abounds when you look towards your new normal, you may start to realize fear! One source of that fear is insufficient money. Prayer and good planning can help to bolster your confidence, keep your money fears restrained and hope alive. Knowing how much money you have and what you’ll earn through your job will guide you into knowing what is realistic to buy now and what will have to wait until you earn more money. Budgeting keeps your thinking in line with what you can afford. Planning a budget, using your job’s pay periods as a guide, will help you control cognitive dissonance/anxiety. Money management requires discipline. Spend only what you have instead of trying to get what you want when you want it. Spending your money according to a plan and not spending more than you earn will help you reduce anxiety. See worksheets that follow for a detailed exercise in budgeting!
A spending plan is a picture in your mind or written down on paper of how much money you have and what items you need to spend it on so that you do not spend more than you earn. Budgeting prevents you from being surprised when your money runs out and you still have bills to pay. Tracking the amount of money that you spend and what you spend it on helps you recognize “needs” from “wants” and identifies impulse buying tendencies. Crafting a workable spending plan allows you to learn to live within your means by practicing delayed gratification. (Using patience and self-control or not giving in to the temptation to buy what you think brings you happiness, especially if such a purchase may have made you feel better in the past.) To help you with this do the following short exercise;
1. Write down a wish list of things that you think you will need to spend money on. Then go through the list and write next to each one whether it’s an immediate need (i) or a want (w), then put a star by those that can wait until you have more money available.
2. Determine how much money you need to make from employment to meet your needs for the immediate future. Comparing the amount of money you earn helps better identify the difference between spending on wants verses needs so that you can learn the benefits of delayed gratification.
Budgeting doesn’t mean you can’t buy the things on your “wants” list. It just tells you that you can’t buy them until you have paid for the items on your essential needs list. Don’t forget about spending money in your budget for savings! Set a goal for the amount of money you can afford to save per pay period and then contribute this money to a savings account. Doing this brings hope and will help you afford to buy a higher cost item like a car.
The goal of budgeting is to identify what you can afford. Your aim is to not spend more than you earn. It helps build awareness and is something that should be done often so you can adjust it according to the reality of your earning and spending tendencies. Use the next few pages to prepare a budget. Scroll down to find sample budget sheets.
1. Figure out how much money (income) you have each month to pay for living expenses. (Track income as the net amount; your take-home pay, the amount earned after taxes are taken out of your check). Write this take home amount in the center of your “Spending wheel” and on top of the “Actual budget worksheet” in the space labeled “monthly net income.”
2. Use the “Estimated Spending Worksheet” to categorize what you will be paying for each month; gas, rent, utilities, transportation costs, food, diapers, etc. Assign any money you might spend on miscellaneous items or occasional spontaneous purchases at the convenience store, but do not budget/spend money on any non-essential needs or wants like going to a restaurant for coffee or for a meal you could cook at home. Instead, discipline yourself so you’ll be able to start saving money and planning for the future.
a) Look at the Spending Wheel to get an idea of both how to categorize your expenses and for a visual of the amount to allocate for each.
b) See the sample meal planning worksheet to estimate how much you may need to budget per month for groceries.
c) Write in an estimated amount of money you plan to spend for each spending category at the beginning of the month. Put this total on both the Estimated Budget Worksheet and on the “Actual Budget Tracking Worksheet”.
3. On the “Actual Budget Tracking Worksheet” at the top of the page write in your net income amount for the month. This is the amount of money you bring home after taxes have been taken out by the employer. This is your automatic ceiling limit for spending, unless you have other sources of income. Avoid the hidden costs associated with and the instant gratification derived from the use of credit cards. This will give you a false sense of security and become a bad and painful habit (especially when you are not able to pay off the total amount borrowed by the end of the monthly billing period).
a) Write in each category and the amount of money you anticipate spending on it. (Columns 1 & 2)
b) Write in the amount of money you actually spent during the month by category. (Column 3) For ease of tracking, try keeping all receipts in different envelopes that match your categories on your budget.
c) Compute the difference by category so you can see where you over or under projected your spending. (Column 4)
d) Add up the dollar amounts spent in each category and write it in on the top of the page labeled “Total amount spent.”
e) Subtract the total amount spent from your net income to find out if you managed your money wisely.
Example grocery shopping plan compared to actual cost
Use a worksheet to help you plan your weekly meals. Using that list, create a master list that you can bring with you to the store. Bringing a list with you to the store will help trigger you to use self-control to curb impulsivity. For example, you may be more attracted to sugary items as your body adjusts to its new reality. Be aware of this craving and do not over-indulge. Don’t substitute food for comfort.
Things to consider:
1. How many meals can you afford to eat each day?
2. What types of meal do you want to have for each day, after considering the price.
3. How can you rotate your spending so you can not only afford to buy food items but paper and hygiene products too.
The example on the side of this page is meant to give a visual of this process. When you make purchases at the store, some products you buy will last longer than others. Keep this in mind as you spend. It will help make your money stretch. For example, buy all the items on your list the first time (to stock items in your home) if budget permits. The next week when you go to the store and assuming that you keep a standard menu, you won’t need to buy as many items. If you bought mustard, ketchup, baggies, lunch bags, milk, peanut butter etc. you will have at least $10.00 extra to spend on another item that you couldn’t afford to get during the last shopping trip.
Calculate your +/-; Compare your budget to actual spending
1. Define the budget time period;
Daily, weekly, or monthly cost.
2. List each category of spending.
(Add others to the list.)
a. Rent
b. Renters Insurance
c. Utilities like Water, Electric, etc.
d. Bus passes or car payment
e. Other transportation costs: gas, insurance, etc.
f. Cell phone bill
g. Grocery store food & incidentals like TP, shampoo, etc.
h. Snacks outside of home bought other than the grocery store
i. Clothes
j. Alimony or child support
k. Debts/loan payments
l. Unexpected costs …Repairs, etc.
m. Recreation
n. Personal Care
o. Gifts
p. Tithe, Giving
q. Savings.
r. Other: ____________
s. ___________
Total Amount Spent
$ ______________
Monthly net income
$ ______________
Actual Budget Tracking Sheet for Month of _______________
Budget monitoring will help you refine your money management skills.
Complete this worksheet at the end of the month to evaluate your budget accuracy. Keep track of the money you spend in the “other” category on your budget form. (It’s on the projected budget form, not so you plan on spending in this category- it should be blank, but it’s there to remind you to put it on the tracking form so you can have an idea of the cost of spontaneous buys unexpected costs. By tracking the money you actually spent and then figuring out the difference between what you spent and what you budgeted, you can plan better for the next time.
