When you say the word budget, most people have negative thoughts and think it would be an impossibility for them. The goal of a budget is not to stop your extra spending completely although in reality you may need to. The goal is to help you save for whatever it is you want to save for, from a new couch, to a new house, and most of all, to lessen the stress you are living under.
First it’s a positive way to live. When you know when and how your bills are going to be paid, it helps give you peace of mind. Also, when payday arrives, you get out your budget, pay the bills, and then it is a lot easier to forget about money problems until your next payday. Believe it or not, it relieves a lot of the stress in marriages and relationships. For example: you have borrowed money from your parents, now you can show them when you will be paying them and how much at that time. If couples do the budget together, at least in the beginning, it gives both of them an understanding of how they are going to have to live, and for how long.
Is it impossible for some people to live on a budget? I would have to say maybe. Example: addicted to gambling, shopaholic because of issues like not feeling loved, etc, etc, etc. It would depend on whether or not the person is willing to confront this type of problems and strive to change them. There is nothing that cannot be overcome with enough will and determination. Knowing God is a big help too.
Okay, I’ve given you my reasons. Ready to begin this journey? If so, keep reading.
The first thing we need to discuss is a checking account. Some of you may be experts at maintaining a checkbook, but I am sure a lot of you aren’t. You may be saying that your credit is so bad, you can’t even get a checking account. That’s okay too.
Having a checking account at a bank is a priviledge. It is your responsibility to maintain it by keeping good records and keeping a positive balance at all times. You don’t have to stop and record every debit card or check transaction you make at that very minute, besides, the people in line behind you at the store would not have appreciate it if you did. Put the receipt in your wallet. Treat the receipt as a very important document, because, until it is recorded in your check register, it is.
A typical check register has 8 columns. Number or code, date, description, payment amount, check mark, fee, deposit amount, and balance.
Number or code – can be - check number, DC if it is a debit card purchase, ATM if you got money from an atm machine, AD for automatic deposit, D for deposit, or the word AUTO for anything you have on auto draft that automatically comes out of your account each month.
Date – I think you get this one.
Description - What is the transaction? If it’s a purchase, write the name of the store. If it’s a check, write who it was written to. If it’s a deposit, write the name of where it came from. This will probably be the company you work for.
Payment Amount – Amount of your purchase or the check amount.
Check Mark – Leave blank, this will be used later.
Fee – Most banks today have free checking but some don’t. When you open the account they give you a pamplet or some kind of paper that tells you the terms. Some banks change a per check fee. If they do, this is where you record it.
Deposit Amount – I think you understand this one.
Balance – If you look at the top of this column you will see a place to put in a dollar amount on the title row. This is your starting balance if it is a new account, or the balance from the bottom of the previous page.
Now, all you have to do is be a good record keeper and fill in the information. When you come home in the evening be sure and spend the couple of minutes it will take to enter the receipts or deposit slips you collected thru the day. Always use a calculator to at least double check your addition and subtraction. ALWAYS enter the exact amount of each transaction. NEVER round a transaction or add two or more together and enter them as one. The amount that goes in the balance column is the check or purchase amount plus the fee if there is one subtracted from the balance on the line above this one, or the amount of your deposit added to the balance on the line above this one. Don’t skip lines in the balance column. Write the balance amount on each and every line. When I get to the end of a page, I always do a last check of the entire page with my calculator before I write the balance amount on the top of the next page.
Next is balancing your account with the statement you receive monthly from the bank. The statement will list debit card or auto draft items, checks, deposits, monthly bank fee, etc. This is what the check mark column is for. Go down the statement line by line and put a check mark in your check register for each amount listed on your statement. If there is something you forgot to write in, do it now and check it off. I keep the envelope the statement came in beside me for anything that is different. Example: if you accidentally recorded a debit card purchase as 10.06 and it was 10.08, write +.02 on the envelope. Or, if it was 10.08 and you wrote 10.06 write -.02. If there is more than one mistake that you caught, add or subtract them for a total you either need to add or subtract from your check register balance. Record this in the register with a description of Adjust account and check it off. Then add it to or subtract it from your balance and record the new balance the same as you do for any other transaction. When you’re finished with this, enter into a calculator the balance amount that is on the line with the last check mark. Anything above this line that is not checked off, do the opposite of what you did in your register. If it was a deposit you added, subtract it. If it was a purchase, add it, etc. When you’re done, compare the amount you end up with according to the calculator with the ending balance the bank says you have. Does it match? If so, good job. If not, write down the amount from the calculator, clear it and redo the calculator work to make sure you didn’t make an error. If you get the same amount twice that does not match the banks ending balance, you have two choices. 1. enter an adjust account transaction for the difference between what you have and what the bank says you have. 2. recheck your addition and subtraction on each page of your register and double check you checked everything off properly from the statement. I highly recomend number 2.
If you absolutely cannot figure out why you and the bank disagree, you should be able to get a teller to help you. If it’s a small amount, you can keep it written down somewhere and see if next month you disagree by the same amount, then possibly adjust your account. If it’s a large amount, I recomend you go to the bank for help.
If you have an account you have not been balancing every month, draw a line in your register and start fresh from there. You will probably have to trust the bank and adjust your account to agree with them the first time you try to balance it. If it means adding to your balance, I recomend you write that amount down and wait until you disagree by the same amount for 3 months.
Lesson 2 will be posted tomorrow.
