Homesteading in this modern world comes with its own set of challenges — money management being one of them.
Budgeting is a very important aspect of managing personal finances, regardless of lifestyle. For homesteaders it is especially important since the lifestyle is often more “risky” than a 9-to-5 job and a home in the city.
Why is Budgeting So Important for Homesteaders?
Budgeting is especially important for homesteaders or those living self-sufficiently for a number of reasons. Here are just a few:
- Homesteaders often have increases in expenses during particular seasons, such as buying seeds and starting equipment in spring or buying bulk feed for livestock in fall.
- Income isn’t always a reliable check every month. Homesteaders or those with other types of income streams coming from their land need to organize them properly for their budget and for taxes.
- Unexpected emergencies are more apt to happen.
- Equipment and machinery repair bills are much more likely on a homestead compared to a family in the city with one car.
- New homesteaders may not have an income right away. This is common for those who quit their job to move. A budget will ensure you are financially secure and keep debt to a minimum until you’re on your feet.
How to Make a Simple, Quick Monthly Budget
Making a budget really isn’t difficult to do at all. For a low-tech budget you can just use a pen and a notebook. Since most people do have access to a computer, even if they don’t necessarily have Internet access, using a desktop program is usually an option.
Microsoft Excel or Open Office (free to download) both will let you set up your budget in a spreadsheet format. The automatic formula options will also calculate totals for incomes and expenses for you.
After choosing whether you’ll go with pen and paper or a spreadsheet program, you’ll need to gather up or write a list of a couple other things like:
- Your recurrent monthly bills.
- Irregular/upcoming bills, those such as bi-monthly, quarterly, yearly, etc.
- Monthly expenses.
- Upcoming large expenses for seasonal purchases or other large purchases.
- Any debt, loans, car payments, etc., that need to be paid off.
Calculating your expenses can be tedious. If you’ve been collecting your receipts, that will make this step easier. If not, you’ll either have to go through your credit/debit card history or just brainstorm and do the math if you’ve only been using cash.
If you’re running your homestead like a business, I would recommend creating your household monthly budget and homestead monthly budget separately. It’s your choice.
Ok, now to put it all together.
1. Format Your Budget Design
Set up your spreadsheet on the computer or create a chart in your notebook. The design is up to you. Some people just use a Word Document or just use the lines on the notebook paper.
2. Add Income
List your all income streams for the month. You can include minimums for projected income as well. It is useful also to have the payday dates listed for the next step.
3. Add Monthly Bills and Due Dates
Now you want to add your monthly bills as well as their due dates to the budget. Due dates are helpful if you get paid throughout the month. You’ll be able to determine what bills to pay earlier in the month and which can wait until a payday later.
4. Add Monthly Expenses
Once your monthly bills are down, it’s time to add your projected household and/or homestead expenses. These expenses can be categorized by subject as detailed as you wish. Usually it’s a good idea to at least break down certain expenses like “Groceries,” “Clothing,” “School Supplies for Kids,” “Livestock Feed,” etc.
5. Add Monthly Required Savings
Remember up above when you gathered quarterly and yearly expenses? Now you are going to need to add these together and divide them by 12 or however many months away the expense is. This will leave you with how much you need to put aside every month to meet this upcoming bill/expense.
6. Manually Calculate or Insert Formula for Carry Over
At the end of the budget you can again calculate or insert a formula to determine how much money you’ll have left over after all of your expenses. Either you’ll be negative (bad: revisit and find where you can save money), break even with your income (good) or have some leftover for savings (best).
If this seems like too much, no worries. Excel and Open Office both have built-in budget spreadsheet templates you can use. You can also find templates online. These templates can be super basic or extremely detailed.
For those of you running your homestead like a business or who really need to carefully keep track of your personal finances, I highly recommend going with a program made for that. I personally use Mint.com, which works very well for personal finances. Another program I’ve used and recommend is Quicken.
The very best piece of advice when it comes to budgeting is so basic people often forget. Use what you’re going to use. For example, if you’re not a tech-savvy person, then you’re probably going to give up on budgeting even if you’re using the best budgeting program on the market. The same goes for people who love detail and automation and get bored with pen and paper.
Budgeting is a habit that must be practiced before it becomes normal. Remember that budgeting isn’t something that is restrictive by nature, which is often why people shy from using the tool. In fact, you are far more likely to live happily, more freely and less stressed when you keep a budget.
Do you keep a budget now or plan to in the future? Maybe you have a certain method, program or other tip to share with others? Please comment down below!