The Basics of Budgeting – from my dad
When I was 16 and I started my first job at Dairy Queen, my dad sat me down at the kitchen table and taught me how to balance a checkbook. He said that if I learned it in high school, it would become second nature when I entered the real world. Many people learn how to budget either from experience or Dave Ramsey. In this article, I am going to discuss a few basics of budgeting I learned from my dad. These helped me in high school and will hopefully help you personally or help you teach your kids.
Designate a place to budget
The first step to budgeting is to find a place to record your finances. You can use a check book, an excel spreadsheet, or even a budgeting app on your phone.
Separate needs from wants
Separate the expenses that you cannot live without such as groceries, rent, and utilities from your wants like entertainment and eating out. Decide how much money to put toward all of these categories.
For reference here is Dave Ramsey’s Budget Percentages from mamaandmoney.com
These percentages represent the percentage of your income to put toward each category every year. For example, if you make $40,000 per year and put 8% of your income towards health, that is $3,200 a year. To find out how much that is per month divide 3200 by 12, which equals $266 each month. If you only spend $100 on health one month, then you’ll have an extra $166 to use for the next month.
Your health budget, which is separate from your insurance budget, can include your gym membership, vitamins, or even itSpray solutions!
Save for Possible Expenses
Life throws many curveballs at us. It is important to put money aside for expenses you weren’t expecting. For example, these include car and house repairs. If possible, try to separate this category from your actual savings.
Hopefully these basics of budgeting I learned from my dad can help you take charge of your finances.