Welcome back, budget-makin’ friends! Or, sorry – maybe we’re not friends yet, because I made you look directly at your money situation and then look at it harder and you hate me now.
I’ll accept this, because you’re a hater on their way to an actual, adult-life budget! (We’ll be friends later) and it’ll help you save money for travel.
Last time, I walked you through a few steps that changed up the way you think of paying your monthly bills.
If you’ve followed along, that means you’ve identified your bill-paying Bae Day, listed out all of your Bae Bills that we’re now paying every two weeks, and promised yourself you’d take care of your Bae Bills the true BAE way: Before Anything Else.
There are just two more things to do before you’re on that budget hype. Spoiler alert: I think you’ve already done the hardest parts. Don’t stop now! There’s wine at the end (if it fits in your new budget)!
Before we jump in, one more reminder that I created a Google doc to make these steps hella easier on you. Make yourself a copy and go to town using this link.
Let’s put this puppy to bed, shall we?
Final Two Steps to Build your Budget System:
1. CALCULATE YOUR RATCHETRY FUND
I know, I hear you: “Berna, you’ve made me stare at my boring adult bills for hella long. Where in your system do I get to have, like, actual fun?”
We’re headed there with this step, which tells you how much fun money – that do-whatever-you-want money – your budget gives you. But for those of you who didn’t catch it, let me emphasize: Your budget tells you how much fun money you get; you don’t get to make that number up or improvise it with every paycheck, contrary to Millennial belief.
I call my fun money my Ratchetry Fund, simply because I let myself whatever ratchet things I want with it, whether it’s cashing out in dollar bills and throwing it in the air at Da Club, or eating my weight in Thai food for two weeks. I highly recommend you name this fund whatever makes you most excited to live your best life.
First, remember your Bae Bills – all your monthly bills that you cut in half to pay every two weeks? Add all of those every-two-week bills up. We’re looking for the total dollar amount you will be paying towards your bills every Bae Day.
Once you’ve done that, use this brutally simple formula to see what fun money your current budget allows:
[Your paycheck every two weeks] – [Your total Bae Bills] = Your Fun Money.
So, if you get paid $1000 every two weeks, and your Bae Bills have you paying a total of $800 every two weeks:
$1000 two week paycheck – $800 total Bae Bills = $200 Ratchetry Fund
It’s a simple concept: You get paid every two weeks, you pay all of your Bae Bills first (like you promised!), and whatever is leftover is what you get to have fun with. This Ratchetry Fund is meant to last you two whole weeks – until your next Bae Day, when you get paid again, repeat the bill-paying process and replenish your fun money.
Now, this is where a lot of people get sad, reach for wine, and claim their calculators have been possessed by demons. Stick with me.
Your Ratchetry Fund may be tiny. It may seem impossible to last two weeks on that fund. It may even be a negative number, like mine was when I first budgeted.
It does not mean you can’t have a budget – but welcome to another big money-clarity moment.
If you are like I was, trying hard to live a fun life but wondering why you always feel broke and can barely pay your bills? It’s probably because you spent more Ratchetry Money than your budget actually allowed.
You might have been spending as if you had $400 extra dollars to play with, when in budget-reality, after paying all of your bills, you really had $40. Now you’re looking right at the problem – this is what folks mean by “spending beyond your means.”
This might be the first time you have ever laid out your bills next to your fun-money life, so be nice to yourself, and take a breath. There are ways to fix this, and it means taking a hard look at your bills.
What’s in there that you can cut down? What number can be smaller, if you really tried? Can your rent be cheaper with roommates; can you nix the gym membership and (gasp) take up running?
I want you to remember that you’re in control here – you’re in control of your money, your whole budget, the fun stuff and the serious stuff. So, think honestly about this, remembering that you hold the power:
What are you willing to give up in exchange for having a bit more fun and flexibility in your life?
2. WRITE OUT SUPER DETAILED INSTRUCTIONS
WOW. Feel that? A little bit of nausea mixed with a little clarity and empowerment, and two scoops of just wanting to lie down? You’re doing it right, and you’re almost there. This last step will automate everything we just talked about so that next time, all you have to do is follow your own steps.
Your last step is to write out exactly what you earn every Bae Day, and exactly what you are going to do with that money. And by exactly, I mean eggs-act-lee. Pretend that you are instructing a total stranger how to treat your Bae Bills on Bae Day, with exact dollar amounts and all.
I’ll show you an example from one of my past-budgets:
Every two weeks, I get paid $1000.
When that paycheck hits, here’s what I do Before Anything Else:
- Put away $400 for when rent is due.
- Log onto Sallie Mae and pay $200 towards my student loans.
- Log onto Chase and pay $25 towards my credit card bill.
- Log onto the Toyota Thing and pay $125 towards my car loan.
- Log onto T-Mobile and pay $50 towards my phone bill.
- Put away $5 for when Netflix is due.
- Pay my Savings bill by transferring $100 to my Savings account
AND THEN, AND ONLY THEN…
- Transfer $95 to my Ratchetry Fund.
Feel free to use my exact structure and wording, or change it up – whatever feels good for you. Put your instructions at the top of your new Felicia’s Wallet Budget document, where you’ll see it every time you sit down on Bae Dae to pay your bills and get your money right.
Now that you’ve got a full-on walkthrough of exactly what to do every time you get a paycheck, you’ve really done the dirty work. It will feel freakin’ excellent to not have to think too hard when you set time aside to deal with your money.
3. CELEBRATE YO’SELF!
BOOM. You freakin’ did it, magical wizardly money budget slayer of the modern world! Middle-fingers to the haters and all those years of being budget-blind. You are officially out of the “I don’t know jack squat” place.
Pause to love on yourself real quick, because you just took a huge step forward.
Give yourself a few cycles of Bae Days to see how this system feels. It took me at least 3 months and tons of revisions and tweaks to get into a groove that felt right for me. That’s the great thing: This budget is yours now, to customize in whatever way you see fit.
Budgeting is not a thing you do once; it’s a muscle you train over and over until it’s a straight-up habit. But now that you’ve got your whole routine down, all you have to do is flex.
Budgeting and money shouldn’t take up your life – it should support it, decorate it, and remind you that you’re the empowered one, and you’re in charge.
The point of this system is to grind a little so you can make regular budgeting as easy on your future-self as possible, which gives you more freedom and time to do what you want.
Freedom and time, after all, is the realest, most ratchet-tastic kind of wealth.
Have any budgeting tips of your own to help you save money for travel? Share in the comments!
Full breakdown of this process in video form, below!