I have been doing on-paper, on-purpose, before-the-month begins budgeting every since I moved out 9 years ago – back then it was because I had to make every penny stretchhhhhh, now it’s because I want to get as much out of my income as I can.
I personally am a Dave Ramsey fan – I know his and some of SO’s advice can clash, but I think they both have great things to bring to the table. And at the end of the day, they both teach, you HAVE to be in control of your money, or it will just disappear. It really will, you have no idea where it goes but it’s the end of the month and it is GONE.
When I was starting out, my expenses were like 98% of what I made in a month. It was tight. That other 2% had to go to cover emergencies, like a pet getting sick! OMG, I still remember when I had a cat get extremely ill in the middle of the night and I had to spend $800 to have him cared for. That was an insane amount of money for me.
I’m now down to expenses being about 60% of what I bring home in a normal month, and I have about 50% of my pay coming out in taxes, 401k, health insurance, etc coming out before I ever get home. It is SUCH a blessing. I worked really hard to combat lifestyle inflation – putting raises towards retirement instead of bringing them home, automating savings, etc.
Fiance and I are taking it one step further – we are going to live off of only his income once we are married. Our expenses (with a very comfortable lifestyle that we could cut back in an emergency) will be 92% of his take home pay. We’ll then take the remainder plus all of my income (and I actually make slightly more than him) and sock it away in savings towards buying a house in a few years. Then if one of us ever wants to be a stay at home parent or spouse, we can do it, have no house payment, and a comfortable life on one income. I anticipate we’ll have a paid-for house by 35 at the latest. Not having debt is the #1 best decision we’ve made – Fiance paid off his student loans quickly (and they were big, he just lived frugally), we bought cars we could afford with cash and moved up as we saved up. Debt will suck the money out of your pocket so fast. Your income is your biggest wealth-building tool, don’t sign it over to a lender!
None of this is to brag – only to encourage anyone out there. The first step really is looking at where your money is going and getting control of it. You CAN do this!!