Are you ready to start building a budget that works and you actually love? Learn the nuts and bolts on how to quickly and easily make a flexible family budget!
Creating a Budget That Actually Works for You
Last week I mentioned that one report found 73% of millennials are living paycheck to paycheck. When you’re in that situation you can be an added weight on shoulders because if one thing goes wrong – and it will- it can make a mess of your finances.
For this week, I want to go from the big picture view we took on the potentials with budgets and get into the nuts and bolts. How do you build a budget?
Which is why I’m happy to have Warren Murray on the show today. Warren works Financial Well Being Manager over at Coastal Credit Union where he and his team help members live better by managing their money more efficiently.
In this episode we’ll get into:
- why having a financial snapshot your finances is important and how to do it
- how building your budget around financial wellness is more efficient and sustainable
- creative ways to include fun into your budget while still working towards your financial goals
Hope you enjoy!
Resources to Build Better Budgets
If you’re looking to start or revamp your budget so you can reach your family and financial goals faster, check out some of these resources below!
- Best Budget and Money Apps: Empower, Tiller, Mint
- Grab Your Copy of My Book: Jumpstart Your Marriage and Your Money
- Where Can I Find the Money to Build Emergency Savings?
If you’d like to chat more your money system, please join us in our private and free Facebook group – Thriving Families. It’s a group Andy, Andrew from Family Money Plan, and myself run as a team.
We’re families looking to support and help one another out.
Hope to see you there!
Thank You to Our Sponsor Coastal!
Support for this podcast comes from Coastal Credit Union! Come check out Coastal today if you’re living in the Raleigh Durham area and looking to bank better.
As a credit union, Coastal serves its members first and foremost including an annual loyalty bonus.
We've been members for years and love their service and competitive rates on checking and savings accounts!
Building a Budget That Works for You
Elle: Warren, thank you so much for joining me. I'm thrilled to have you on because we're talking about a topic that's near and dear to my heart, but I think people have a lot of fears and they believe a lot of myths, and that's budgets.
I wanted to talk to you, Warren, because of the work you do at Coastal about how you can budget for real life versus you see those crazy budgets that like no one wants to keep and do so I appreciate you making the time to chat with me.
Warren: Not a problem. Elle, thank you very much for having me. I look forward to educating your listeners on how easy it's to budget and how important it's to budget.
Financial Wellness: More Than Just Making Money
Elle Martinez: I noticed the work you do, it's falls under financial wellness, which for some people that's a new concept, do you mind kind of getting into that work that you do and what financial wellness means to you?
Warren Murray: So Elle there's this misconception out there when people talk about financial wellbeing or financial wellness, the first thing they want to think of is about how much money that you make.
Oh, if you make this much money, then you must be financially healthy. And what I bring to the forefront in letting our members know and other people know is that, Financial wellbeing, it has nothing to do with how much money you make, is realizing how much money you have coming in versus how much money you're going out.
Basically, we try to take the approach of helping people utilize their money more efficiently matter if you're making hundred thousand or $200,000 a year. Or if you're only making $50,000 a year, a lot of people can use their utilize their money more efficiently, and that's what we try to bring to the forefront.
Helping people or partnering with people. That's the word that I like to use with the people that I work with, is that we're gonna partner together to help them utilize their money more efficiently and also make them aware of what their financial habits are. Oftentimes when people hear the word habits, they associate habits with exercise habits or smoking habits, but we also have financial habits.
Some people have good financial habits. Some people have areas that they can improve in their financial habits, so that's one of the things that we work on with this financial wellbeing program.
How to Utilize Your Money More Efficiently
Elle Martinez: That's fantastic because I really do think that even before you make a budget, you have to have that foundation, which is defining your priorities, your values, what's important to you, and then of course the reality of where you are now.
And I love that you're talking about being efficient with your money, making your money work as hard as you do, because especially here in the triangle area, things are increasing. Every time I turn on the news, I see prices, not just at the grocery store, but housing. You have to be savvy with your money and making sure that it's really being effectively used towards your goals.
You have a unique perspective working with so many people, families in our community with their finances. Are there any Misconceptions or one of those mistakes that keep coming up that you see people make that you would love for them to avoid?
Warren Murray: The first thing that comes to their forefront and in general is that oftentimes when we're talking to people and you ask them how much money they make they can tell you within two to 3 cents, ‘my paycheck is such and such with 23 cents, and on the other week, it's such and such with 24 cents', which is good.
People need to be aware of what they make. But when we ask people how much money do they spend specifically in certain categories, the answer oftentimes comes back ‘a lot'.
Like, well, how much money do you spend eating out? ‘A lot.'
How much money do you spend drinking your Starbucks a month? ‘A lot.'
Although a lot can mean a lot of different things, but from a mathematical standpoint, I can't subtract how much money you make each month minus a lot.
What I try to focus on is just making people aware of what they have coming in, but most importantly, what they have going out.
Oftentimes Elle when we're doing our counseling sessions with our members what people think they spend and what they actually spend are two separate numbers, especially when it comes to the categories of eating out and also streaming services.
Those are the two things that I see that people could drastically improve on.
Elle Martinez: Yeah, absolutely. And one of the good things I love about Raleigh is also one of the things you have to watch out for is there are some incredible, food places out there. We always have some festivals going on and you do, you wanna make room in your budget for fun and to enjoy it, but it is very easy.
This has happened to us before, I kind of call them money leaks where. It's a little bit of spending here. You've planned for this spending, and then these little ones, $20 here, $20 here. It adds up really quick. So I love that.
The Importance of Prioritizing Financial Habits for a Sustainable Budget
Elle Martinez: Getting a financial snapshot, an accurate one of what's going in and what's coming out so when making a budget, , you have the numbers in front of you. What are some of the conversations you're having with those that you're counseling to create that budget?
Warren Murray: The first thing, Elle in common sense approach is that if we have a person who has $8,000 coming in a month and they have $8,400 going out on one. You don't have to be a mathematician to realize that if you're spending more than you're making that's a problem.
Whether you see the problem right now or in the future, there's gonna be a problem. So that's the first thing we wanna make people aware, like, okay, how much wiggle room do we have?
Or is there any wiggle room whatsoever? So that's the first thing why we start with. What's your make versus how much you have that's going out.
The second thing that so many people have misconceptions about when it comes to budgeting I hear oftentimes, oh, well, I'm gonna stop eating out completely or I'm gonna give up my Starbucks completely.
I tell people, budgeting is not that. Basically everything in moderation. So what we try to look at when we're evaluating their budget is like, Hey, If you're spending $300 a month or you're spending $400 a month eating out, Hey, can we curtail that a little bit? Can we, instead of spending $400 a month, let's see if we can drop it down to $250 a month.
With that $250 a month, we empower people to make the decision like, Hey, if that means that you and your family are gonna go one extravagant dinner a month, you do that.
Or if you're gonna say, all right. If we have $200 a month, we can spend $50 a week. We can do that. But again, we just wanna make sure that you have everything in a budget or you are aware of how much money that you have to spend so that way you can make best decision.
Have member, she loved her Starbucks coffee. I tell people like, I'm not a coffee drinker myself, but when you go to Starbucks and a mocha latte here today, before we know it, we were evaluating and this person was spending almost $300 a month just at Starbucks and coffee alone.
I was like, Hey, if you're a coffee drinker, there's nothing wrong with that. But instead of spending $300 a month, you think we could curtail that back to $200 a month or can we curtail that back to 1 75 a month? So again, having people getting a plan. Mm-hmm. And one of the things I wanna emphasize here is that again, we partner with the members.
I can't tell you what to spend your money on, but what I try to do is like work with them. Like, okay, this is what your budget has or this is what your budget allows. You tell me what you wanna do with these funds. Yeah,
Elle Martinez: Absolutely. I love that. Like you said, partnering up and giving them that control cause I think when done right, a budget can give you so much control over your money.
When we were first married, we were in debt and I felt like it was a lot of reaction, you know, after the fact trying to get the finances in a good spot. But when you budget, it does empower you.
I think you've hit a couple really good points. It's not necessarily the expense, like if there's a measure of joy that you get going to Starbucks. Maybe that's your time to kind of relax and settle, then that's great, you know, you get value for that. But look at other places where maybe you're not getting as much value and, and own it. Like, this is what I want and why.
There's always a way to get creative. I believe, where you can have fun and you can still save a little bit of money. So I love that point.
I also love what you pointed out of just taking the time to prioritize. So, you know, yes, we have to pay the bills. I think we all have to acknowledge that, but we have to set something aside. We also have to enjoy.
I believe that a, a sustainable budget is a successful budget. Same reason why diets fail. If it's too strict, if it's too unrealistic for your situation, you're not gonna keep it.
You have a lot of great points with that. What tips do you have about creating that flexible budget where they aren't like cutting it to the bone, they don't have to be perfect every month. How do you build that kind of wiggle room in the budget?
Warren Murray: Basically when we're evaluating their budget, the first thing that I use is, is tell people that we have to be cognizant of what's happening right now. And you and I had talked earlier in terms of a lot of people are dealing with inflation. I mean like gas has gone up. The cost of groceries going up so it's always a need to reevaluate the budget that you have.
In terms of reevaluating that budget, just making sure that people are aware that you're staying in the confines of what you one of the things I point on is streaming services. I've had so many people tell me, oh, Warren, Cut. I've cut my cable.
I'm saving money that I'm saving $150 a month because I cut my cable. Well, when I evaluate their budgets, oftentimes people get a streaming services. They have Hulu, they have Amazon Prom, they have Disney, they have Netflix.
One of the things I tell people when, when you're evaluating is oftentimes when you have a streaming service, you get that subscription and because it's automatically debited on your account mm-hmm. You don't look at it again.
People aren't aware that what you paid for Hulu two years ago or what you're playing, what you paid for Netflix two years ago has gone up drastically. So I wanna make people aware, like, hey, when we're evaluating their budgets, You were okay paying $10 a month for Netflix. Are you still getting that same bang for your book now that Netflix is at 18 or $19? Or who, or you have seven streaming services? Are you watching all those channels? So again, just bringing the evaluation.
Now, when you said in terms of like, What changes do we make? Sometimes the things that are that, that you have no control over causes you to make changes.
Right? Now you've had several people that if they're renting at an apartment, their apartment rent has gone up 200 to $300. They're still in the same apartment, but because they're landlord has increased the rent just due to inflation. Now we need to take a look at your budget. Like, all right, before we had some wiggle room, now we have to allot for that two to $300 elsewhere.
Or when it comes to groceries, we like, ‘all right your grocery budget was $500 for no fall of your own. You're buying the same things and now your grocery bill is 600 or $650 a month'. Now that we know that what we're working with, where can we take from to make sure that we can keep you afloat in regard to that?
Elle Martinez: Absolutely. Oh, these are such great points and tips and yeah, this is the reality. We're based here in Raleigh, North Carolina, but a lot of people are dealing with inflation and then a lot of cities that have high growth. The trade-off is they're also seeing costs like housing increase drastically.
So definitely don't wait to see that go up, see if you can get proactive with your budget and start prioritizing where you're getting that value.
You mentioned streaming. I have a streaming service. I'm not gonna mention and I like it, but they recently did a merger and I just got the email while I was on vacation.
That's starting next month. It's gonna ‘be better', but it's gonna have a lot more services I don't need. And I was talking with my husband about that. I gotta set up to cancel. So when we done with this call, that's what I'm gonna do.
Warren Murray: Thank you. Yeah. I just wish we had more people. And again, I tell people, if you enjoy whatever you enjoy, like you said mm-hmm. That adds value to your life that you should do. But as long as you are aware, and oftentimes the people that I'm working with, they're not aware. They're like, oh, well I didn't know that I had $190. In streaming services.
I cut my cable cause I thought I was saving money, but now that 50 I was spending via cable, now I'm spending hundred 80. So again, my task, what I wanna make people is aware, like once you aware you can make the best decision for you and your family.
Elle Martinez: Absolutely. Yeah. And it's not necessarily what that expense is, but like you mentioned, like, are you getting the value?
And when the price increases, then that's, you gotta reassess that. I think that's the reality now nowadays with 2023 is when we're looking at the expenses, am I getting a value out of it? And then second, if the increase is there, if I wanna keep it, where do I trade that off?
A budget should be reviewed. I know personally we like to do like a money day, I would say like a monthly rhythm. See what's coming up. Are we going on vacation? Like when we went on vacation, the month before, we said, oh, okay, we're gonna eat at home more because when we go down to Florida, that's when I want to eat out and enjoy the, all the mom and pop spots and, and so forth.
It's finding that balance and, and putting your money where it matters most to you. Warren, you gave a lot of great tips. Is there any more that we, we forgot to mention or talk about?
Paying Yourself First: Starting Small for a Strong Financial Future
Warren Murray: Again, one of the things that I, I think when it comes to budgeting, people are so focused on paying down debt, or they're so focused on just being able to pay their bills that they neglect.
One of the things that I think is most important, which is paying yourself first. One of the things that we really focus on is like, hey, regardless if you can only pay yourself $10 every paycheck, or if you can pay yourself a hundred dollars every paycheck, the importance of paying yourself, those are funds that you're putting to the side.
Because we all know that life deals us. So many obstacles because when people focus on dis paying their bills and paying down their debt, which are good things, mm-hmm. But they neglect paying themselves.
What happens is, is that six months down the road, or 12 months down the road, or 18 months down the road, life happens to us and all of a sudden you have car repairs or your AC unit goes out.
Because you put all your focus on paying down that credit card bill and you haven't paid yourself. Guess what? That cycle starts back again.
All that work that you put toward paying down that credit card bills, because you haven't paid yourself, you don't have any wiggle room, now you have to put that expense back on the credit card.
What we do when we look at budgeting is like, Hey, we wanna pay your bills, but we also want to allot funds to the side for life. Like, Hey, like you mentioned, going on vacation, everybody knows that they typically try to take a vacation every, every year or every other year. So let's put money aside to work on that.
If that means we have to eat out less. $50 a month to eat out, less, to put those funds to the side for vacation. Let's do that. That's the one thing we try to focus on all of our members, and I tell people sometimes it's only $20, but the sense of pride that my members that I worked with when they realized like, wow, I never had any emergency funds, and now, although I may only have $250, that that sense of relief, like, Hey, I do know now if something unexpected that were to happen, as long as it's less than two $50, I can cover it without the credit card or without.
Knowing where I'm gonna get those funds from. That's one of the things or aspects that we take for people that I want them to be aware of, is like, Hey, it's okay to pay down debt.
It's okay to make sure that we have our bills paid, but we also want to make sure that we are also paying ourselves for one life deals us on unsuspected circumstances.
Elle Martinez: Yeah. If the past three years have taught us anything, it can happen. It can be much longer than we expect. Yeah, and it does.
There's of course the financial aspect, but there's a peace of mind knowing that at least I have X amount should something come up.
If you're a parent like us kids, unexpected expenses come up, school asks for money for field trips or whatever it is those are things to be prepared for.
You mentioned like the automatic deductions for streaming. I'm also a big fan of automatic transfers into savings for yourself.
Paying yourself, treat it like a bill. I know when we first started it was just like you mentioned, it was, we were recent college grads, so let's just say the amount was very small, but it was the habit of savings that we developed that allowed us to get used to that.
As the paychecks increase and switch jobs, we were able to put more towards saving. And it really is a help. If you're listening, start where you are now and you can always build up. Don't wait for those perfect moments. Start now to get that financial cushion, growing.
Warren Murray: And Elle I would add one other thing and, what you just stated, and that's one of the, the quotes that we use that a journey of a thousand miles begins with a single step.
The reason that we use that quote so much to target what you were just talking about is oftentimes if people make budgeting mistakes, they carry the burdens of the past with them.
When we're partnering with our members, I tell them I don't have a magic wand to erase mistakes or things that we wish we could have done differently a year ago or five years ago, but what we can focus on, if you're willing to work with me, if you're willing to partner with me, hey, can't change that.
But starting today, and that's the thing that I, I wanna emphasize starting today. Like, hey, everybody can budget it. It's like, okay, starting today, doesn't matter what we did last week. We're gonna start today to get a better grasp of what our finances are and just make people aware and help people utilize , their money more efficiently.
Elle Martinez: Yeah, absolutely. I love that. A lot of us carry some embarrassment because maybe we don't know about finances or we didn't grow up with good financial role models.
Maybe we're not starting off at the place we wanna be at this time, but you can always make better choices for the future and start showing especially as parents. Show your kids, Hey, I made some mistakes now, but I'm gonna build my finances for the family.
That's a lesson that they can take away and start building their own financial habits in a positive sense.
Warren Murray: That's why I'm so proud to be a employee of Coastal Credit Union is that we don't care about how much money you make. Our purpose is to help our members bank better, to live better and it gives me so much joy when we can help a member improve their financial situation.
That's what we're really focused on. We're really focusing our members, helping our members utilize their money more efficiently, but importantly, helping our members better to live better.
Support the Podcast!
Thank you so much for listening to the podcast! If you enjoyed this episode and found it helpful, here are some ways to support it.
- Spread the word! If you enjoyed this episode and think it can help a buddy get on the path to dumping debt and become financially free, please share.
- Join our coffee group ☕: Get access to exclusive behind the scenes videos, chats, and more!
- Leave a review. Honest feedback and reviews make a big difference and gets the word out about the podcast. Leave your review on Apple or Stitcher.
- Grab a copy of Jumpstart Your Marriage and Your Money. My book is designed for a busy couple to set up their finances in four weeks. Get tips and tools that have worked for other couples on their journey of building their marriage and wealth together!
Photo by Karolina Grabowska