Albert Einstien once said, “Everything should be made as simple as possible, but not simpler.” There is a lot of complexity to finances, and sometimes it is difficult to find the simple answer. Sometimes the answer is so simple and obvious that you miss it because of it’s simplicity. My heart in this week, as we begin to get more into the details of setting up your budget, is to help budgeting become extremely clear, simple, and accessible to you. So please feel free to ask questions, feel free to comment. I really want to make this as simple as I can for you, but at the same time I realize that we are all coming from different backgrounds with different financial situations.
There is a simple way through the maze that has been your finances and with the grace of God and the map of a budget, we are going to find it. Last week we dealt with how to identify your bills, and this week we are going to identify your livable income. The heart of a budget is managing your money and being purposeful with that money, and simply determining how much money you have to live on each month is absolutely critical.
So how DO you determine how much you have to live on, no matter how much your income fluctuates? For some of you, this is not a difficult issue because you are on salary, and are paid a fixed amount once or twice a month, and consequently know exactly how much you have each month. However, for those of you on commission, self-employed, or hourly wages, it is not that simple. I am going to start today with those on a fixed salary, so that everyone can get the heart of where we are going with a budget on a simple example.
Let’s say that you are paid $1500.00 on the 15th and the 30th of each month. Your take home pay for the month would be $3000.00. This is the total that all of your bills have to be subtracted from. Very simple and basic, and yet for some of you this may be an “Ah-ha” moment. However, even if you are paid just once a month, I want you to divide your salary into two sections, the beginning and middle of the month. It is too time consuming to continually manage your bills throughout the month. No matter when you are paid or how often, I recommend sitting down twice a month (of course you can do more if you would like) and looking at your budget and paying your bills. This system is particularly easy if you are paid twice a month as you can sit and make out your deposit and pay your bills and handle your finances all at the same time. That way you don’t have to worry about your bills for the next two weeks.
Instead of trying to manage your bills all at once, like some unwieldy giant, it really does bring simplicity to divide the month in half and face it as two separate parts. Conversely, if you are continually paying bills and trying to manage your finances, it will bring simplicity to you to only do your bills twice a month. Managing your finances should not control your life, it should empower your life, and bringing simplicity is the way to do just that.
So that’s it for today. Simple, easy… for today anyway. Determining your budget may not always be so easy, but once it is done I guarantee you it will simplify your life. You won’t be constantly worrying about missing bills, or if you have enough money in your account, or where your money is going, because you will have a plan for your money, and you will know exactly where your money is going. The simplicity and peace that is going to come to your finances will make all of this effort worthwhile. In closing, I want to share a quote with you, because I know you are going to feel the same way about budgeting:
“As a destination, Simplicity is not the easiest place to get to, but once you find it you will never want to leave.”