Say Goodbye to Living Paycheck to Paycheck: Forward Budgeting and the Cash System

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This post is part of a series.  To start the series from the beginning, click here.  To browse through the series, click here.

Forward budgeting, also known as the ‘forward roll’ is also a three-step process.  Each month, you project your expenses and savings.  At the end of the month, any funds that weren’t used will be transferred into your savings account.  This process repeats each month.

Envelopes

The envelope system can be used in a similar method to reverse budgeting.  The only difference is that you don’t put a set amount of money into the Savings envelope at the beginning of the month.

Instead, allocate the money into the spending envelopes.  At the end of the month, move any money that is left in the envelopes to the Savings envelope.

envelopes

Paper

Using a printable is a fun way of tracking your finances.  There are many budgeting printables online that would be a great solution for your spending tracking and savings rollover.

Computer Spreadsheet

A computer spreadsheet is very helpful when using the forward roll method.  The main point of the forward roll is to maximize saving potential.  A computer spreadsheet can help you to project your savings over time.  This is very useful when saving up for a large purchase like a house or a car.  You can find multiple examples of tracking the forward roll method with a spreadsheet here.

Apps/Programs

Apps and programs are a great way of tracking spending but can become very complicated when tracking cash.  I recommend using either a paper tool or a spreadsheet to track cash finances.

Say Goodbye to Living Paycheck to Paycheck: Reverse Budgeting and the Digital System

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This post is part of a series.  To start the series from the beginning, click here.  To browse through the series, click here.

A digital budgeting system utilizes credit cards, checking accounts, online interfaces, apps, and many other technological opportunities.  All your budgeting and tracking is kept in digital form and you are responsible for sticking to your budget without having tangible money to stop you from over-spending.

Budgeting Tools

Envelopes

Envelopes are a great budgeting option for the digital system as seen above in the cash system.  The main difference here is that the envelopes are digital and act mainly as a tracking device rather than a place to hold the money.

The digital envelope budget tracking downloadable is a great tool to use to track your budget one month at a time.  Start by allocating each portion of your paycheck to an envelope and noting the amount allocated on the top of the envelope.  When each bill comes due, note the actual amount of the bill and subtract from the allocated total to determine how much is left in that digital envelope.  Note that throughout the whole process, the funds will all reside in a savings or checking account.

Once you have your amount left, you can transfer the money to and from envelopes as needed.  This envelope tracking system can also be printed to track your budgeting.

Yes, you can use a printed tracking tool while having a digital system such as a bank account for storing your money.

Digital Envelope Budget Tracking

digital-envelope-budgeting-tracking

Check Register

If you are using a checking or savings account to store your money, chances are the bank has provided you with a check register.  This isn’t the best tool for breaking down your budget into separate categories but this is a great tool for making sure you don’t spend more than you have.

Every time you make a transaction, note the transaction in the ledger lines of the check register.  You will always know how much you have left in your account as long as you make sure to note every charge and deposit.

Computer Spreadsheet

Computer spreadsheets are a great way to track your digital funds.  This helps you break down your finances in any way that works best for you.  A computer spreadsheet is by far the most personalized method for budget tracking.

You can find budgeting spreadsheet tutorials here.

Apps/Programs

Apps and programs are also a great way to track digital finances.  Most banks have an app where you can see your funds instantly.  There are also other apps that can connect to your bank and create different graphs and spending charts.

Apps and programs are not as personalized as a spreadsheet and typically only show past finances rather than future finances.  Because of this, it can be difficult to create your budget for each category every month.

On the plus side, many apps and programs take virtually no time and you can see your breakdown of spending and saving instantly.

If you are interested in learning more about apps and programs, do a quick search in your platform of choice.  Example: For apps, search the Windows app store, IOS app store, or the Google Play store.  For Programs, use your preferred search engine.  One of the main programs for personal finance is Quicken which works much like a physical check register but can quickly draw up charts.

 

 

How I Saved $40k by the time I was 21

Hi everyone and welcome back!

Every month, I share a post on my series about how to stop living Paycheck to Paycheck.  Budgeting is something that is learned and it is my hopes that this series will provide some great stepping stones to help people.  The series will run through June of 2017 but if you want the whole book now, you can get it here.

Growing up, all of my friends thought I had no money because I rarely went to the movies or bought random crap at the gas station.  In fact, it was quite the opposite.  I was saving my money.

Learning Young

From a young age, my parents taught me the importance of saving.  I remember being really young and receiving $4 per week allowance for doing simple tasks like making my bed every morning.   Out of these $4, I could spend $2 and I had to put $2 into my savings account at the bank. My parents had started this account for me when I was either born or really young and it already had included a small amount of funds from gifts.

As I got older and was able to do more chores, my allowance increased to $10 per week and the same rule applied.  $5 could be spent and $5 had to go to the bank.

Now, $5 doesn’t get you very far so I also had to save the spending money in order to get something from the store.  Over and over again, I would save up and by the time I would have enough money, I either didn’t want the item any more or I had saved so long that I didn’t want to see the money go.  So, most of my spending money ended up in the bank.

Working

When I was 12, I started babysitting.  This is when I really started saving.  My first year of babysitting I was making $3/hr watching one child or $5/hr for two children.  The first year of babysitting I made a little under $1000, all of which I put into the bank.  I continued babysitting and saving until the kiddos I babysat were old enough to stay home alone.  This was around when I was 19 years old.  My fees had gone up to $10/hr for one child and I didn’t have any jobs with two children at that point.

In addition to babysitting, throughout high school, I worked the concession stands during the games, helped out my neighbor in her dental office, and got my first job in a retail store.  I also helped neighbors with house-sitting or other house projects like painting.

I remember one day when I was around 16 where I had three babysitting gigs in one day.  I worked from about 9am to 9pm with only enough time to go from one house to another between.  As much work as it was, it was so rewarding!

When I was 18, I landed a job that paid very well considering I didn’t have a degree.  This job was fun and flexible around my school schedule.  I stayed with this job for two and a half years.

Living at home

I lived at home until I was 21 even though some days I thought it was going to kill me.  I definitely had the fear of being the boomerang kid who moves out too early and can’t make it on their own.  So, I made damn sure I was going to be successful when I finally did move out.

The entire time I lived at my parents, I saved all of the money I earned.  When I was ready to move out, I started looking for a home to buy.  I knew I never wanted to rent an apartment.  Of course though, that purchase fell through and I ended up having to rent.  Anyways, good thing I had extra money saved up to put towards rent right?

 

I always knew that there were going to be large purchases ahead and that by the time I turn 28 that I would have definitely need a new car.  I knew that I was also going to buy a house.  This is what kept me motivated to save and kept me from buying novelties.   I will be turning 28 in April of 2017 and am very happy that I saved early on.  I am now able to sell my house and purchase house #2 where I will start my family.

While not everybody may be able to live at home until they are 21, there is always a way to better your situation.  Saving money towards a larger goal or saying goodbye to living paycheck to paycheck requires the motivation to work hard to have a better future.