Guest Post: Laura @ Life of Laura on Budgeting & Finances

I'm so excited to have Laura here today as apart of our Elf for Health "share your expertise" challenge!

Be sure to click over and check out her blog :)

******************************

Hi, all! I'm Laura, and I blog over at Life of Laura, where I discuss fitness, baking, pop culture, and life's little adventures. Today's Elf 4 Health challenge is "share your expertise." And while I don't know I would go as far as to say I'm an expert, I do have some experience with budgeting and finances, so I thought I would share some of my knowledge with y'all. Financial health is an important piece of the overall health puzzle for me, primarily because it decreases my stress. And everyone could use less stress in their life. :) Budgeting is a great tool that can help you pay off debt, save up for a big purchase, build a nest egg, or just live within your means. The budgeting process can seem kind of daunting, but the peace of mind it's brought me has been worth the time investment for sure. Here are some tips for getting started:

- Make a monthly budget: Total up your sources of income. Then, observe your spending habits for a month (write a log, keep receipts, or pull your bank statements for what you would consider a typical month, spending-wise – e.g., not the month you bought a refrigerator AND a new work wardrobe). Categorize your spending (groceries, clothing, entertainment, etc.) and note how much you've spent in each category. The goal here is to make sure your income total is more than (or at least equal to) your spending total. In some categories, like your rent/mortgage or groceries, there's not going to be much wiggle room. But other categories, like going out to eat or buying clothes, are more discretionary. To save money, cut down your budget on any of flexible categories, but be realistic. For example, if you currently go out to eat five nights a week, don't plan to quit eating out entirely. Cut your budget by limiting yourself to 1-2 times a week, or opting for fast-casual places instead of fancier fare. You can also prioritize certain discretionary categories over others. I love going to the movies, so I will allow money for that each month by cutting back on my clothing allowance.

- Add your annual expenses: Make a list of non-monthly bills or expenses and their amounts. Examples of this could be: vehicle expenses (oil changes, registration, tires, and insurance), gym membership, Christmas/birthday gifts, vacations, home repairs, etc. Total these expenses and divide by 12, and tuck that amount into savings each month. For example, let’s say my car insurance is $500 twice a year, and I usually spend around $600 on gifts, and my gym membership is $300. That adds up to $1900, so I would need to save about $158 per month to cover these expenses. You may have to adjust your budgeting categories to make room for extra savings every month, but for me it’s absolutely worth it. The holidays are a lot less stressful when you get to December and find you've already saved enough money to buy gifts for everyone on your list. :)

- Make an emergency fund: Nothing will blow your budget like an unexpected expense. If your car breaks down or you have a medical issue, having extra money available to you can alleviate some of the stress in an unpleasant situation. The amount you should save can vary: Dave Ramsey (a personal finance author/radio host) recommends $1,000 for a family (or $500 for an individual) to start, then up to 3-6 months of expenses once you pay off debt (he’s a big proponent of living debt-free). I have a friend who has a $5000 deductible on her health insurance, so she keeps that amount in her emergency fund. Personally, I would start with $1000, then add to it as circumstances allow (and you settle in to budgeting). If you don’t have that kind of money stashed away, cut your discretionary expenses as much as possible until you’ve come up with it. Or sell some unneeded items or Craigslist. But make it a priority to have some cash saved up. And only use it for true emergencies! Your furnace breaking in December: emergency. A major sale at Lululemon: not an emergency.

- Keep it up, month after month: The easiest way for me to keep track of my budget is to use cash for most things. My wallet has small envelopes for groceries, eating out, clothing, entertainment, and discretionary (my husband and I each get a little bit of “mad money” to use for whatever we want each month). Other envelopes for things like haircuts, buying cosmetics, etc. are kept at home, since I don’t use them on a regular basis. It’s easier to stay on track with cash, because if you want to order a pizza but there’s no money in the envelope, you’re out of luck! To keep track of the various annual expenses, I use a spreadsheet. That way, I can keep it all on the same savings account, but I have a breakdown of how much is in each category at any given time.

These tips really just scratch the surface of budgeting, so feel free to ask me any questions you have. Again, I'm not a finance professional by any means and these ideas are just what works for me, but hopefully you'll find something you can apply to your own life. Thanks for reading, and a special thank you to Danielle for letting me share my thoughts with you all!