Budget Tips, Money

How to find your Missing $5000 in your budget

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As a "20 Something," most people aren't worried about a budget. I have learned if there is no budget, I usually don't know where my money goes. Here is a step by step of how to create a budget to save money.

In 2016, I spent 3-4 full weeks traveling to a ton of different places. I wandered through Wyoming, Idaho, Utah and Colorado. I flew to Florida to see my sister before she moved. There were Christmas lights in Texas that I just HAD to see for my birthday! It was probably some of the best experiences of my life and I would not trade it for the world. After I own my home, I hope to travel like this again, but I would never have been able to take a full month off work to travel like that if I wouldn’t have had a plan.

“A budget is telling your money where to go, instead of wondering where it went.”

When I work two jobs and pick up extra shifts and my second job, it really isn’t to pay rent or the electric bill. When I turn down people for dining out and getting drinks because I am “broke,” I don’t mean that I don’t have money.   I mean that I haven’t put any money aside in my budget for drinks and dining out right now. I limit what I spend going out because I am have other priorities for where my money is going. Without my budget, I would have never been able to travel that much while still paying all of my bills. Now I am planning to pay off all of my debt. Check out my updated debt numbers!

Here are 5 Steps to create a budget and find your missing money!

1) Write down every single thing that you EVER spend money on.

The list should be absolutely exhausted, from rent, to insurance, to fireworks on the 4th of July. The longer you get into the routine of budgeting, the more categories you will come up with and the better the system will work.  To get started, I suggest rough estimates. There is always room for adjustments along the way. At the bottom of the post, is a printable for 70+ budget categories that everyone should have!  I currently rent my apartment so I don’t have all of the expenses of a house, but I tried to list some of them.

If you sit down and can’t think of anything at all that you spend money on other than bills, I suggest tracking your spending for 2 weeks. For me, every month is a little different, but having a starting point is the most important part of budgeting. I bet if you start tracking your expenses, you will find that you are spending a lot more per category than you think you are.

2) Figure out about how much you spend a month (or a year) for each category.

Figuring out the monthly cost of each item can be super easy for bills that come every month, but there are some categories that can be difficult to estimate. Listing out monthly bills should be a relatively quick process. I alter them on the first of every month because I know that electric and gas for a home can change depending on the season. Some of the other categories get a little messy, but the goal is to think about how much you are actually spending.

For example, one of my categories that I have is my contacts. I know that my insurance covers $120 a year for my contacts, but that only pays for 6 months worth. Every 6 months I have to pay $120 out of pocket. This means that I put $20 a month into my budget for my contacts. This way it doesn’t “sneak up on me. To read more about my “sinking funds,” check out my detailed blog post about them!

I read one story about how a couple was unknowingly spending $500 at restaurants every month between the two of them. How CRAZY! What if that is you? How much are you spending on food without even realizing it?

3) Figure out how much you income you bring in

This can be the scary one.  Listing income can be messy if you have more than one form of income or an irregular income. Start by listing the main forms of income. (Jobs and other steady forms) Then list other irregular incomes. This can be altered monthly, but usually I base it on a set number of what I expect to make, then as income comes in, I usually alter my income. This is super hard as a waitress or anything with commission based income to budget, but here is how I do it!

If you have no idea how much income you make, I suggest tracking it for a month as well. You might be surprised on how much you have coming in. I know that I was extremely surprised when I found out that I was making almost double what I thought I was. I was also a little ashamed that I had been blowing through money and had pretty much nothing to show for it.

Starting a blog might be a good way to bring in some extra income for those fun expenses. If you have thought about starting a blog, check out my 7 easy steps to starting a blog! Starting your own business is an expense, but it is an investment to your future as well.

4) Figure out how much you have “left.”

Subtract your expenses from your income. This is how much you should have left every month. If it is way more than you think it should be, you may have forgot an expense. Or you may be spending way more than you thought you were.  If you have more than $415 left over every month, and you never have left over money after your bills, you just found your $5000.

If you have this much missing, it is really time to get serious about tracking your expenses and seeing where your money is going because it obviously isn’t going where you think.

If, by chance, your expenses are more than your income, it is time for some change. It is time to find a different or another job. Or possibly move to a cheaper place. Cut back on your eating out or grocery bills. Stretch that penny as far as you can get. It could also mean that you need to consider getting a second job or a different job depending on how much of a difference there is between the two of them.

5) Set a Goal or a Reason to Have a Budget

Many people will give up by the end of the first month if there is no reason to have a budget. Set a goal to do something with the extra money that you are saving. Go on a family vacation that you have wanted to go on. Buy that new vehicle. Get a different car. Even to get rid of all your debt. Maybe your goal is to not get to tax season and wonder where all of your money went.

My goal is to be debt free by 23 years old. I have roughly $31,000 in debt (mostly student loans) that I am trying to pay off. This means that I have cut money from certain expenses and put it into my debt payment categories. Paying off things like my student loans and my vehicle are more of a priority to me than clothes and getting my toes done. After I am debt free, I want to buy a house so I can get a dog!

Just do it

Having a budget and living in a constant “I can’t spend money” state of mind is not fun. I do not recommend this rigid lifestyle long term. It is okay to cut your spending to make your budget work for a little while, but it won’t work forever. You need to budget to reward yourself. Budget “fun” money, “date nights,” and “splurge”

It is fun to have an extra piggy bank to put a certain category of money along with any extra or unplanned income. When you have some extra money, do something with it. But having the extra money to spend is so much better than trying to figure out where your money went at the end of the year.

Do you have a budget? What are some categories that you have set up? 

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4 thoughts on “How to find your Missing $5000 in your budget

  1. I don’t know what I would do without a budget! I also am not your typical 20-something as I have my eye on the prize: financial freedom! I’ve been going hard at knocking down my balances but one mistake that I made was not doing anything for myself. You definitely have to include a little fun in your budget to keep yourself motivated and refreshed.

    1. I have found some stuff that is for me that is free. I have taken more bubble baths in the past few months than I have in the last few years! I did splurge and I pay for Kindle Unlimited and I have finished 3-4 books this month! Well worth the $9 a month! I have gone out to eat a little more than I think I originally planned, but it was in my budget!

  2. So, I’m a 30 something year old and have been planning out my boyfriend and my’s budget for the past year and half or so due to our income being more steady and constant. I’ve tried to keep us on track and sticking to our budget but we always seem to derail and splurge. I find that I am not including other essentials in our budget such as “fun money”, “dog expenses” (I know I’m a terrible parent), clothes and personal items, mostly because I like to buy in bulk and we don’t need many items on a monthly basis. Either way, after I read your blog I listed our last two weeks of expenses and holy moly we’re in trouble. I had no idea of the amount of the extra money we were dipping into. I’m really looking forward to this upcoming April No Spend Challenge now that I have a better grasp on budgeting.

    1. Awesome! I am so excited for you to join the April No Spend Challenge! I know it is going to be great! When there is still money in the account, it is easy to forget about your goals! I can’t wait to see what you can accomplish in April! Wishing you the best of luck!

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