Controlling your budget is one of the essential skills you will need to have to be a homesteader. By controlling your budget – rather than the budget controlling you – you will have the freedom to make sound decisions around you homestead as well as giving you the power to plan and save. And yet some many people never really work hard at getting this skill honed to a fine art.
Controlling your budget – the questions.
There are really only three questions you need to be able to answer to be in control of your own money.
1. How much money do you earn?
2. How much money do you spend?
3. Are they in balance?
The first two are easy to answer – you should have a good idea of how much money is coming into your pocket each month. It may be from a job, sale of products, retirement, lottery winnings, share dividends and so on. You should also have a good idea of how much money you spend each month. These expenses are fixed (mortgage, car payment, insurance etc) and the flexible spending (food, entertainment etc).
If you DONT know these two things then you need to start taking records…just for a month even…to see where you money is coming from and where it is going to.
The third question – Are they in balance? – is the real key in controlling your money and your life. This is where you really need a budget.
Controlling your budget – you be the boss!
To be the expert in controlling your budget you need to be the boss of your money. Just like a boss, you need to assign ‘jobs’ for your income. The jobs include paying bills, buying food and saving for a rainy day or planned purchase. You need to track those ‘jobs’ and see how your money is working. Then you need to work out efficiencies that you can bring in to make the ‘jobs’ easier and cut costs…or even bring in more income.
Developing a good working budget is not difficult – but it does take time to set up a system that YOU will use. I love to use a simple spreadsheet. It works for one month. I copy and save it for the next month, making slight adjustments as I go. I record what I am spending as I go and I can use it to track payment of bills and how much I am saving.
Not everyone is good with spreadsheets. While more time consuming in the long run, even a paper budget that you can photocopy for each month to fill in the details and do your own math is great. And there are even some really neat programs that will do it for you (You need a budget is just one).
Controlling your budget – a secret
To work towards real freedom, you need to start a plan where you have at least one months income as a buffer…so that you are really only spending what you earn LAST month rather than what you bring in THIS month. If you can achieve that level of control, you will be well on the right track of controlling your budget (and your fiscal life).