BUDGETING
The reason you need a budget is because you can’t control anything that is not measured.
Lets make a real life example from Jan 2025. ( How did we come up with these numbers? )
— Unskilled Labor Job at minimum wage of $12.50/hr for each of 2 room mates.
(lowest wage I could find on Indeed.com)
— 2BR Apartment from University Park Commons @ $770/month for qualified low income.
— Assume you bought a $8000 car financed 3yrs at 6.5%
— Assume Utilities of $184 (from Numbeo.com)
— Internet cost of $25 from Charter Spectrum “assist” @ $25/month for qualified low income.
— Health Insurance (silver plan) at this income level is completely subsidized at Healthcare.gov
Let’s create a sample budget.
MARY’S BUDGET
| Hourly Wage: | $12.50 | Room mates: | 2 | |
| Budget Item | $/month | Divided By | $ /month | Remains |
| Mary’s Wages / Month (direct deposit) | $2,135.42 | $2,135.42 | ||
| Rent | $770 | 2 | $385.00 | $1,750.42 |
| Utilities (Elec, Gas, Water) | $184 | 2 | $92.00 | $1,566.42 |
| Food | $300 | 1 | $300.00 | $1,266.42 |
| Car Insurance | $60 | 1 | $60.00 | $1,206.42 |
| Car Payment | $252 | 1 | $252.00 | $954.42 |
| Renter Insurance | $12 | 1 | $12.00 | $942.42 |
| Health Insurance | $0 | 1 | $0.00 | $942.42 |
| Internet | $25 | 2 | $12.50 | $917.42 |
| Cell Phone (Consumer Cellular) | $25 | 1 | $25.00 | $892.42 |
| Cable TV (use tv antenna) | $0 | 1 | $0.00 | $892.42 |
| Fuel | $75 | 1 | $75.00 | $817.42 |
| Entertainment | $250 | 1 | $250.00 | $567.42 |
| Xmas Savings | $20 | 1 | $20.00 | $547.42 |
| Savings | $100 | 1 | $100.00 | $447.42 |
| Emergency Fund | $100 | 1 | $100.00 | $347.42 |
| Retirement Investment | $50 | 1 | $50.00 | $297.42 |
You see that some of the items are GREEN. These are items that you should set up to be automatically paid for, by the online bill pay that your bank should have for you. Schedule each of these to be paid at the start of the month so that you can easily check to make sure the checks get cashed when you balance your checkbook.
The RED items are those that can vary and are NOT automatically paid. The green items are easy to manage because they are constant, automatically paid. The red ones will always be the money you spend out of your own pocket.
The RED items are are easy to lose control of. Some folks put the cash in labeled envelopes each month and spend out of the envelope. When the envelope is empty….you have used that category’s allowance.
Additionally, most employers will have something called DIRECT DEPOSIT which means that on pay day, your pay check is automatically deposited into your checking account.
I once had an employer who did not have direct deposit but I had them write “Deposit for Stuart Wise acct# 123456” in the memo, and then mailed my paycheck to my bank.
I then spoke to the bank manager and arranged with the bank to deposit it when it arrived! It worked very well.
You can see the budget has an excess of $297.42. You should get move that back to the savings category once you get these numbers working for a couple months.
About Savings. Get your emergency fund to a level where it could provide you with at least 6 months of income. This would be to keep you afloat while you find another job. Once you get to that level, you can move that monthly payment to regular savings….