"Love your Budget, Love your Life!"
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Hey girl, hey!
So you're really starting to get into this budgeting thing... Not so bad right?! As a step further, I always recommend separating your money into three accounts: Savings Account, Bill Pay Account, and Spending Account. Let me explain why...
How many times have you gotten your paycheck and then a few days later you look at your bank account and wonder, "Where the hell did all my money go?!" Then all of a sudden that panicky feeling starts kicking in because maybe you are realizing that you still have a ways to go before your next payday or what's worse... there may be a few bills you forgot to pay and you have zero dollars in your savings account (Gasps of Horror!).
If the scenario above describes you on a regular basis, then girlfriend, we need to make some changes! You want to separate your money because it's too easy to overspend on other things when you have it all jumbled up together. How do you know exactly what's going to what? When you're swiping that debt card to pay for those shoes you just had to have... how do you know that wasn't the electricity money you just spent? Or part of the rent? So in order to avoid these situations I suggest having three separate bank accounts: one checking account for strictly bill money, one checking account for left over spending money, and one savings account to stack some dough away for a rainy day.
So how will I know how much money to put in each account?" you ask. Great question! Remember that exercise I had you do in my "So What's This Thing Called Budgeting Anyway?" post... where I asked you to write down all your monthly expenses? Bam!... That total amount right there goes into your Bill Pay Account. Now you're left with your Spending Money and Savings Money.
The general rule of thumb is to put at least 10% of your income into your savings account, but in reality, most people are not in a position to do that. I say put in an amount that you're comfortable with, but will still allow you some wiggle room for left over spending money. The key to saving money is to not touch what you put in the account, so even if you can only afford $25 every paycheck... if you leave it alone, the amount will rack up quickly. Trust me!
Spending money or "Play Money" (as some of my clients like to call it) is the amount you have left over after all bill money and savings money have been put away into their designated accounts. Your spending money is the part that makes your budget feel less restrictive. Let's say you have $200 left over for spending money until your next payday. That money is yours to do as you please... buy clothing items, nights out with the girls, movies, etc (you get the point). However, once that spending money is gone... it's gone (no dippin' into the savings). So you'll still have to make purchases with discretion (ballin' on a budget, girl)!
So here's my challenge to you... separate and organize your money into the three accounts as mentioned above and notice how your money will begin to work for you. Try this tip out and don't forget to like and share with all your girlfriends!
Until next time,