Making a budget and sticking to it is one of the hardest things that a person can do. But, it is one of the fastest ways to success and financial freedom so sit back, get out a pen (or get ready to copy and paste) and learn how to make a budget in a few easy steps
1. Start with the things you have.
Open up your bank account and empty your pockets. Your budget has to start with what you have right now. Not last year, not in a few months. Write down the number that you have.
2.Build an Excel Sheet or write a Finincial Statement Sheet To Start Tracking
Because I am feeling genourous I cleared the Excel Sheet I built my budget around and am giving it to you! BudgetTemplate
Look at this list and see what things are necessities for yourself. Good Luck!!
- Food. When you have food in your belly, you live to fight another day.
- Utilities. Should you keep the lights on? Make sure you’re budgeting for electricity and water even as you work to perfect your credit score. “Utilities” also includes insurance payments (renters, homeowners, life insurance, etc.).
- Housing (rent or mortgage). Watch that you don’t fall behind on your mortgage.
- Transportation costs (gas, car payment, car insurance). You can’t get to work if the car’s been repo’d.
- Clothing. This is not an excuse to get the latest $400 pumps. The clothing budget — especially when you’re trying to pay down debt — should only be for the essentials.
- Health. Most of us have copay and deductibles to meet, so we need to anticipate those medical payments that are not covered by insurance.
After the necessities for living — food, utilities, shelter, transportation, clothing and health — are covered, anything left over is called “discretionary income”. This can be used to to get rid of debt (or at least those pesky monthly minimums), to invest for long term financial goals, or to spend at will. For additional ideas, here’s how to budget your money by using a simple system.
3. Budget as a team! The Nerd vs. The Free Spirit
In every relationship, there’s a nerd — someone who absolutely loves spreadsheets and budgets and numbers — and a free spirit — the one who absolutely chafes at the thought of being constrained by the dreaded “B” word.
4. Make allowances in your budget and pace your spending.
It’s very likely that your first budget will not work. To be realistic, consider allocating a little more to your budget categories. Unless you are literally living on Top Ramen, $100 for food will not work. Dave Ramsey recommends that until you get the hang of things, over-budget (or create a bigger budget than you think you’ll need) for your first few monthly plans. Being realistic about what you can afford and pacing your spending well throughout the month should help you avoid dining on fast food and leftovers by month’s end.
5. Budget for emergencies.
Dave Ramsey suggests that you have an emergency fund of $1000 that is accessible but not spendable for non emergency things. This is a must. Trust me. After this, start working on a 3-6 month emergency fund. Maybe you wont need it, but someone you love will.
6. Talk about your money.
Budgets generally fail because people don’t talk. Make sure you and your partner talk often and get on the same page with what is going on with your money and where you are.
