The #1 Mistake Made When Starting A Budget

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Your Money Your Life Ep. 190: The #1 Mistake Made When Starting A Budget

In this episode of Your Money Your Life, I’m tackling a common budgeting question: “Do I need to gather all my expenses from the last year?” Spoiler alert – no, you don’t! Instead, I’ll share smarter, simpler strategies to build a successful budget without getting overwhelmed. From utilizing tracking systems like YNAB to creating lists of monthly and annual expenses, we’ll streamline your financial management. I’ll also touch on the importance of budgeting systems that scale with your income and adjust to life’s unexpected twists.

Don’t miss these practical tips to make budgeting less daunting and more effective!

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Resources:

Budgeting Simplified – https://aimeecerka.com/budget
Prosperity Simplified – https://aimeecerka.com/prosperity
Budgeting For Success Worksheets – https://aimeecerka.com/budgetworksheets
Bookkeeping Support – https://unstoppablebookkeeping.com
Work With Aimee – https://workwithaimee.com

Podcast Key Points

0:00 – Episode Overview

1:32 – Lots of Extra Work

3:11 – Start Now With Your Budget

9:09 – Budget Should Handle When Life Happens

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Introduction

So I need to gather all of my expenses for the last year, right? That was a question that I got from a friend and client just the other day, and I wanted to talk about what the answer was, because this is a mistake that I see so many people make when it comes to the new year new budget type mentality. So let’s get to it. This is the youe Money, you Life podcast. I’m your host, Aimee Cerka, a money confidence coach for female entrepreneurs on the path to six figures.

Meet Your Host

After over 10 years in the personal finance industry and multiple personal financial and medical crises, I was fed up with the lies that are being shouted from the rooftops by the gurus and the media. So now I help you simplify, solidify, and scale your money. By blending tactile money strategies with mindset work, you can create unstoppable finances together. You’ll finally figure out the money thing so you can make more money in less time without living off of beans and rice or sacrificing your lifestyle. The episodes here on the podcast are short and sweet.

Today’s Topic

We are talking today about, or I’m answering live, a question that I got from a friend and client just the other week. We were talking about a new budget, new year, all the things. And she was like, so I need to gather all of my expenses for the last 12 months, right? And the answer really is not really sure. It’s a great idea.

It’s Overwhelming

Yeah, that’d be awesome if you did it. But that’s way overwhelming for, I don’t know, everybody, because, you know, I love numbers and that’s a little overwhelming even for me. I know it’s probably less so because, you know, I’ve got the system, I have it all set up. I know it’s easier to do, but if I had to sit there and pull bank statements and categorize everything for the last 12 months to try and create this budget to move forward. The. That’s a lot of extra work.

Changes in the Economy

Partly for a couple reasons. Right. You know, the economy changes, inflation changes. So who knows, even if you went and did the work for the last 12 months, gathered all of those expenses, who knows if that’s even going to be accurate for what it is? Now moving forward.

Make Time for It

Secondly, then you’re going to spend all that extra work doing that and then are you going to make time to do that? Because you haven’t really had the up to date budget as it is. You haven’t made the time to do that. But now you’re going to make the time to do this massive project already feels overwhelming. But you’re going to do all of this all at once and we’re actually going to make time for it. Right.

Start Now

What would be a way better idea to do is start now. Okay. This is what we talk about. Inside Budgeting Simplified is the personal budgeting system and person Prosperity Simplified is the business budgeting system. I make sure that I’ll include links below for both of those.

Steps to Follow

Those are the business budgeting systems that I have created for you to simply budget for prosperity. Creating wealth security scales with you as your income does. It follows the three rules of a successful budget which we’re going to get to in just a second as part of like this is why I wouldn’t do that.

Use a Tracking System

But we’ll put links in the show notes for you so you can check those out. If you were like hey yeah, I need to do something about this. Okay, so instead of spending all the time looking back at the past, past transactions because you know we can’t change the past. Right. So looking at it really doesn’t change anything.

Start with January 1st

A lot of guilt and shame can come up from spending choices etc. The smarter choice would be to start now if you wanted to go back towards the beginning of the month. Hey, that’s smart. Start with whatever is the time that this goes live. Yes, this will be in January.

Pro Steps

First thing I would do would be use a tracking system. My personal one that I use and recommend is called ynab. You need a budget. Y N A B. We’ll put the link below in the show notes. I’ve got an affiliate link. It gives you a free 32 day trial. I believe it is use something.

Other Systems

Mint is another one that’s out there. I don’t love mint for a couple different reasons. It’s. It’s not as customizable. You kind of have to fit into their boxes and I’m not a fan of that in general, like you need to be able to have the customization that you want within your budget because it’s your budget.

Banks’ Tracking Systems

I know a lot of the banks have a tracking system built in, you know, like Chase, etc. The reason why I don’t love that is, is it’s one bank. So if you have multiple cards and accounts across different things, even if you don’t use the others as much, you’re not getting the full picture of where you’re at because it’s specific to this one thing.

Tracking System Importance

It’s better than nothing though. So if you’re going to use that, sure, use it. But just something. Okay. That’s the first step. Use a tracking system. Because we don’t want you to have to do this manually all the time. It needs to be systematized.

Be More Hands Off

That’s one of the rules. And finding like the rules to having a successful budget has to be able to be systematized. It does not need you to be in charge. A part of it all the time needs to be able for you to be more hands off. You’re checking in as a CEO.

Make a List of Expenses

The second thing that I would do, the second pro step here is I would make a list. We have two different things that we’re going to make lists for. The first one is your monthly expenses. So these are the reoccurring charges that you get charged every single month. Water bill, electricity bill, phone bill, all those things.

Why Keep Up with This?

The date that it processes on, processes on who you’re paying, and the card or account number that it auto drives from. The reason that we keep up with this is so that you know that it actually processes and you’re not all of a sudden getting this like, hey, it didn’t go through for whatever reason, you know, your cards expired, something didn’t line up, you didn’t have the available credit glitch on their end. Who knows?

Annual Expenses Tracker

But just being able to keep an eye on it, knowing what those reoccurring monthly expenses are. Okay, so that’s the second pro step. Third pro step, start what we call an annual expenses tracker. Those are the things that we pay for quarterly, annually, semi annually, less than monthly.

List Your Annual Expenses

Make a list of the date that it processes and the amount and what it is. So that way when you go through your month end process at the end of the month, you can look at what’s going to process the next month and determine if you still need to have it. It’s a lot easier to cancel these things before they renew. Right. As opposed to getting your money back afterward.

Spend 5 Minutes a Month

But those, I don’t know, five minutes that you spend once a month making sure that you’ve tracked and written down whatever those annual expenses might be. Maybe it’s your car registration, car insurance, life insurance, Disney plus, whatever. Make a list of them, the amount, and the date that it processes.

Be Ready for Next Year

So next year or next time, it bills, if it’s quarterly, you know, like, okay, hey, this is going to renew. Let me see. Am I actually still using this? Especially on business transactions, we do this all the time.

Templates Available

So, you know, calendly otter, some of those that you just automatically process, we can forget about. But if you’ve got your annual expenses set up, personal one and a business one, then you’re set up for success. Now, if you want the templates for these, we’ll include a link for that below. Because I had the Budgeting for Success worksheets available, which are the templates.

Why Templates Help

There’s six different worksheets included in there for you that if you feel like you’ve kind of got the budgeting system on point, you’ve got the worksheets there to fill everything out. And they’re available electronically and printable, so whichever version you prefer there. But the key is, this is about making things simple. So we want to track it.

Don’t Get Stuck

We want to know the numbers that we need to know or that we should know, that we’re able to move forward, but we’re able to do this without making it mean anything. Assigning meaning, guilt, shame, whatever, not getting stuck in the numbers. Because we can go back and we can record these things, we can know where they’re at.

Moving Forward

But when we don’t add the meaning to it is when we’re still able to operate from the possibility, from the abundance aspect, instead of getting stuck in the nickel and diming and scarcity. So long story short, don’t sit there and feel like you have to go back and look at a year’s worth of expenses. It’s not going to do you any good. You want to go back a month, great. I would start now.

Make Sure to Do the Work

And the reason that we do that is, again, we want to make sure we’re actually going to do the work that we need to. So this is the best way to make sure you’re doing the work that you need to. But also, things change. So we build in. Those other two keys of having a successful budget is that your budget should be able to scale with you as your income grows.

Percentage Based Budgeting

So as your income grows, is it set up to scale? The best Way to do that is through a percentage based budgeting system. Of course, Budgeting Simplified and Prosperity Simplified are both percentage based budgeting systems. But the third thing is it needs to be able to handle when life goes off track. Right

Don’t Zero Based Budget

So many times when we call, when we zero based budget is what this called, is called when every dollar has an assigned place and technically, like your bank account should be at zero. That is stressful as all get out, right? Because we need to be able to have a little bit of flexibility in our life. What if you forget about something? What if you’re out, there’s an emergency that happens and you don’t have what you need to available? That’s not comforting, right?

Build in a Cushion

So what we do is we build in a cushion so that we have the security in place that, you know, doesn’t matter if you miss a transaction, we can catch it and move forward. Right. This also helps when you’re first establishing your budget because it’s going to take a couple of months to kind of figure out where your numbers actually lie. How much you actually spend on average on groceries every month, household expenses, transportation, all of those things, they kind of fluctuate, right?

Varied Necessities

We call them varied necessities. It’s going to take a couple of months to figure that out. But when you build in the cushion, then you’re set up for success. So you can start tracking now or from the beginning of the month when you have the cushion in place. And we talk about again how to do that inside Budgeting Simplified, Prosperity, Simplified.

Systems Work

But those systems work because we’ve set them up and we’re actually using them. And that’s the biggest thing. If you’re going back and looking 12 months ago at your expenses, are you actually moving forward? Are you doing the work that you need to, or does it just become this massive item on your to do list that you keep putting off and you’re not doing the work that you need to because it’s too big of a project. And when we make it too big of a project, we allow ourselves to avoid it.

Avoiding Your Bookkeeping

We do the exact same thing with our bookkeeping. This is the time where, you know, we get. I get all of the cleanup clients that come to me. It’s like, hey, I need to enter all my expenses for 2024 because I need to file taxes. Okay, great, we’ll get you taken care of.

Think About This Year

We can do all that. And if you are listening to this and that’s you, send me a message on Instagram at Emmycirca or go to unstoppablebookkeeping.com, we’ll get you taken care of. We can do that. I love doing those projects because I can see the progress. But what are you gonna do this year so that it doesn’t become this massive project again?

Learning to Do it Yourself

Whether this is learning how to do it yourself, where I’ve got coaching programs that I can teach you how to do your QuickBooks or hiring somebody to do it, having a bookkeeper do it so that you don’t have to worry about it. There is nothing wrong with outsourcing things that are not your area of expertise. And a lot of times, even if you can do it, does that mean you should do it? And there can be a level of, you know, like we’re working up to be able to hit this. And again, budgeting, being smart with our expenses, all of those things.

Move Forward

There’s a. There’s a balance there. Right. It’s your decision. But looking again at the possibility and making sure that we’re moving forward and not allowing the fact that we’re making this, this big item on our to do list as an excuse to be able to put it off and it’s too big of a project to be able to tackle.

Final Words

Alright, that’s what I’ve got for now. Send me a message on Instagram me circa. We had a couple things, so if you’ve got questions, shoot me a message. If you need support, shoot me a message too. We’ll put all the links below that we talked about in the show notes. That’s it for now. We’ll see you next time.

Struggling with Shame?

If you’re struggling with shame and guilt around your finances, whether it’s debt, impulse, spending, mistakes from the past, or the fact that you still haven’t hit your income goal, then it’s time to for you to work with me. There are different levels of support and price points that you can use on the path to removing that guilt and shame so you can step into your unstoppable life. After all, your finances are unique to you and your support should be, too. Go to workwithaimee.com to get started with one of my most popular programs. Or you can book a Q and A call with me. We’ll figure out what your next step should be. And of course, all those links are hanging out in the show notes as well.