Budgeting thoughts & Budget Basic Steps

written by Bari Tessler May 31, 2010
Budgeting thoughts and basic steps

‘Budgeting’ has been on my mind lately 🙂

These days, I like to refer to budgeting as a ‘Map of Intention’, an ‘Intentional Budgeting Process’ or just ‘Creating a Plan for our Goals’.  Some people like to call it a ‘Spending Plan’, but, to me, that leaves out some of the other important parts of our planning that include our current income goals, saving goals, giving goals, etc.

I now see ‘budgeting’ as an ongoing process that I have a relationship with on a monthly and yearly basis.  It is not static, something I create and then I am bound to stay exactly within those parameters. It is a process where I choose to stay in touch with my budget intentions, at the end of each month, to make sure I am staying in alignment with current values and goals in how I am making my money, spending my money, saving my money, paying off debt, etc.

And, when I veer off track, I take the time to understand what is working and what is not working and either come back to the same intentions (and try again) or adjust some part of the plan.  I also take the time, to celebrate the parts that are working, improving and the lifestyle I am getting to experience.  And, lastly, I take time to learn about myself along the way: How is my money relationship playing itself out right now? And, how is it affecting my self worth, purpose, relationships…, etc.?

Also, it is a tool that is dependent and shaped by what is happening in our lives, what phase we are at in our lives, what our current goals and priorities are and how much we are bringing in at the time.  So, our budgets will need to be re-vamped or created from scratch again and again when we go through transitions ie: illness, divorce, marriage, having a baby, new job, loss of job, starting a new business, business booming, new goal arises, etc.

Years ago, I would have run away, fast, from anything that smelled like a budget!  Back then, I imagined ‘budgeting’, as only being able to spend a precise amount in each expense area, and related it to being on a terrible restrictive diet (and that just makes me, personally, want to rebel).  And, also I felt I could not downshift or cut out anymore expenses, while I was in graduate school, because there was nothing left to cut out, except for my basic need expenses.  I did not realize that a budget is a planning tool for income as well as expenses.

I understand that we all are starting at a different place when it comes to budgeting and planning.  Some of us work for a company right now and receive a weekly or bi-monthly paycheck.  I have always seen this as the ideal situation for planning, whether you are making a small amount of money or a big paycheck, you know, if you need to get a second job, ask for a raise, or figure out how to live comfortably within your current revenue plus savings, etc. In this situation, you know exactly, (for now, nothing is permanent) how much you are getting paid and when.  I know many of us can still rebel here or play games and not even look at the numbers, and, the consistent income and precise numbers do bring clarity and reality to your planning.

I know working for someone else has its positives and negatives, let’s say, compared to the life of an entrepreneur, where you work for yourself and can set your schedule and rules.  And, many entrepreneurs as they begin and even for the few years can still be in a phase where the income is up one month and down another and you have yet to reach the place where you can pay yourself a consistent salary on a monthly basis. And, some entrepreneurs eventually arrive at a place of being established (with ongoing services that people continue to sign up for or leveraged & passive income in place) to move into consistent monthly payments and consistent yearly income.

Regardless, of where you are at, a budgeting process is still possible and a very supportive tool, whether you are bringing in consistent income or income that is up and down.

Personal Note:

During the initial 3 years of starting and running my business, my income was up and down every month and I had to learn to budget/plan/experiment.  It was fun, inspiring & scary at times.  I eventually was able to establish my company to a place where I had a solid 4 years of being able to pay myself a consistent monthly income and it was great for planning. That timing also coincided with my husband working for a company and receiving bi-monthly payments, so our budgeting-planning strategies were out the roof – fun and fabulous! My husband was even creating bar graph charts that mapped out our savings and how it would increased over a few year period and also map out our goals and lifestyle being lived and achieved.  It was a peak time for us, from a certain standpoint.

And, then we decided to have a baby, move back to Boulder, CO, and my husband was laid off from his job.  So, he started his first freelance website design business (this website was one of his first designs) and I revamped my business model so i could primarily mommy, and our income was back to up and down again for the first time in years and so back to a different type of budgeting and planning again.  We were more in a dip phase when our son first arrived and then moved into maintenance mode regarding our finances and had to adjust our budgeting and monitor our monthly finances accordingly. Our goals and intentions and purpose changed during the first year of our son’s life.

My husband was eventually hired by a great company (Joomla Shack University) and is receiving a steady pay check again (which he loves) plus some commission and I have been developing my new business model well and getting close to more stable income again (although monthly it is still up and down), I am staying very close to my goals.

Throughout all of this, Forest and I have done our best to stay close to our Budgeting Process and our monthly (and sometimes weekly review) of our numbers, priorities and feelings as our lives has gone through all of the wonderful and challenging phases over the last decade.  And, it will continue…

All of this is to say, that we go through many transitions and many peaks and valleys in our life and in our financial life and having a budgeting process and system in place is a wonderful foundation to help ride all of the waves that life brings us and that we create.

Budgeting. Some of the basic steps: Start Tracking all of your income and expenses.

I highly recommend using a program like Mint.com, Quicken or Quickbooks. And, I do invite you all to track your income and expense every few days as a PRACTICE.  It takes only a few minutes. You can also just download your transactions from your checking accounts, etc. if you prefer that option.  I LOVE to enter each transaction every few days.  It keeps me conscious!

Add Fun & Intention: Rename Your Categories.

I love to bring in the fun and intention to creating and maintaining a bookkeeping system. So, why not bring your values into this otherwise, seemingly, boring process and spice it up a bit and make it come alive with what is really important and true to you.  And renaming helps make it your own, where you want to engage and have a relationship with it!

*Step 1: make a list of your values and spend some time reflecting on this list.  enjoy.

*Step 2:  make a list of all of your income, expense, debt, savings goals, assets, etc., this is typically called, ‘A Chart of Accounts’.

*Step 3: Start renaming your regular named categories ie: Rent/Mortgage to Home or Sanctuary or Love Shack

(I will write another blog article with more tips on how to create a Values -Based Bookkeeping system very soon!)

Let’s start shaping your Budget – Map of Intention

I like to teach budgets in 3 tiers: Basic Needs, Comfortable Lifestyle & Ultimate Lifestyle. This process includes visioning-dreaming, intention & goal setting and just getting practical and real with your numbers! Plus you need to be aware and honest of what phase of your life you are in and what are the priorities at this time.

We go through many phases in life and they each have their beauty and their challenges 🙂 I understand these are all relative terms and experiences that only you will be defining for yourself and/or yourself and your family.

How about first just defining each of these terms:

Basic Needs Lifestyle…

Comfortable Lifestyle…

Ultimate Lifestyle…

Step 1: Create a Bottom Line – Basic Needs Snapshot.

Do the math on what you consider your bottom line, which will include housing, food, utilities, what else, you decide what defines Basic Needs. If you do not have a tracking system in place to get this information, you will need to go to your bank statements and credit card statements and add up the totals of your expenses. Is this $1,000, $2,000, $4,000, $10,000 per month, etc.? We start with the basic needs/bottom tier first to make sure we can cover those expenses and the income required for those expenses and lifestyle.

Step 2:  Create a Comfortable Style Snapshot.

This will include your basic needs, plus whatever happens next, lots of self care (that may be included in basic needs – that is up to you) or traveling, savings goals, retreats, pampering, fancy doctor-healer visits, private school for kids, etc. What is the breakdown of expenses here, what is the total amount and what is the income that you need to be bringing in to make this happen.

Step 3: Create an Ultimate Lifestyle Snapshot.

This will include whatever you see as your Ultimate Lifestyle.

Review Budget vs. Actuals on a Monthly & Yearly Basis

Review what you Planned/Hoped/Intended for over the month compared to what actually happened with your Income and Expenses over the previous month. And then sit and contemplate the following: *Take a moment to take a deep breath, do a body check-in and stay grounded and open. *Add huge doses of compassion and understanding while you are reviewing. *Really ask yourself which areas (expenses, savings, giving, debt repayments) are negotiable and which areas are not negotiable. *Start to make some adjustments – tweaks to your budgets. *Decrease some expenses and increase in some other areas. *Learn from both what is working and what is not. *Do a little celebration dance or nibble on a little chocolate and celebrate what is working. *Understand your emotions here, your story here. *Which goals and values are you living right now and which ones are you not? *Pat yourself on the back for being willing to look and learn about your numbers. *Clarify the budget – intentions for the next few months and begin again…

New Month:

Stay current with your tracking. Stay as present as you can and notice when you are falling asleep during the month while you are spending or not saving or… Review your budgets again.  And, Enjoy!

And, let me know what your questions are~

Hope you are having a fabulous holiday,


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