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Need to start a budget but unsure of where to start?
Let’s start with the basics, are you a spender or a saver? Do you keep track of your money or perhaps your spending habits?
If not, you’re in the right place. It’s time to start a budget.
Starting a budget, allows you to:
- Have control over your money
- Focus on your money goals
- Save for expected and unexpected expenses
- See a true picture of what’s going on with your money
Listen! Budgeting is not that bad. It really isn’t. If I can do it, I’m confident that you can too.
I lived paycheck to paycheck for years. Had no plan or end goal in sight, all I did was spend, spend, spend – no matter what! I thought this was normal. Since I realized that lifestyle didn’t work for me, I wanted to try something different and so far, things are awesome.
For me, budgeting used to be too much work.
I would often freak out about how I’m going to make ends meet. There was a time when I’d frantically search through the ashtray of my car looking for coins just so I can go to Costco and purchase a $1.50 Hot Dog/Soda combo. I wasn’t unemployed, I had a full-time job, all my bills were paid but I WAS BROKE!!! For real! It was so bad, I never had any money left over to purchase food.
I was at a low point and I needed to come up with a plan ASAP!
So, of course, I turned to Google and I completed a search for a budget template. As usual, the search turned up thousands of templates that provided me with ideas, strategies, and nontraditional budgeting methods. As a novice, I felt overwhelmed! I’m thinking to myself, I have no freaking clue of where, how or when to start. I just want the basics.
So I pulled out my thinking cap and my Principles of Accounting textbook. (For those of you who haven’t read my bio, I majored in Accounting and I’m in debt, be sure to check it out when you have a chance.) I was so glad I kept my textbooks because I never knew when I was going to need it. Hey, I’m just telling the truth because you know it will set you free, LOL).
Creating a personal budget was rough. Simply because I had to be transparent with myself!
It’s so easy to brush things under the rug. If I was going to get this right and make sure that I had money in the bank, I needed this to work!
For those of you who are unsure of how to start a budget, I am going to share a few tips that will help you to create a budget that works best for you.
My Experience with Budgeting
I have a love/hate relationship with my budget. There are occasions where I’m head over heels about my budget. Then there are occasions where I literally want to throw the budget out of the window. LOL. If I sat here and told you that I stick to my budget no matter what, I’d be lying to you! We are human and we have those moments where we aren’t always at our best.
The first budget that you create will not work. In the past, I’ve created budgets that have failed. The reason why the budget did not stick was primarily due to my mindset. I created a budget because it looked nice on paper but I was not adhering to it.
As I researched various budgeting methods, I came across the debt snowball method. This method worked wonders as it helped me to pay off four credit cards!
A few years ago, I enrolled in Dave Ramsey’s Financial Peace University. (Phenomenal Program – I’m thinking about enrolling in a refresher course!) This program teaches you how to manage your money as opposed to letting your money manage you.
According to the Dave Ramsey Website, The debt snowball method is a strategy where you pay off your debts in the order of smallest to largest, gaining momentum as each balance is paid off. Once the smallest debt is paid in full, roll the money forward towards the next smallest debt.
The steps are as follows:
- List your debts from smallest to largest.
- Make minimum payments on all your debts except the smallest.
- Pay as much as possible on your smallest debt.
- Repeat until each debt is paid in full.
After applying this framework, I created budget printables that helped me to win with my finances and guess what? I did and I’ve been winning with my finances ever since!
Step #1 – Review Your Income
Identify how much money comes into your household on a monthly basis. You should know EXACTLY how much money you make each month. Review your pay stubs for each pay cycle. By doing this you are ensuring that your company is paying you correctly and taking the appropriate deductions out of your paycheck. If you notice a discrepancy, contact your Payroll department immediately. It’s easier to correct something now as opposed to waiting later.
In order to create an effective budget, you need to know how much money is coming in (income or cash inflow) and
Step #2 – Examine Your Expenses & Create Categories
If you’re uncomfortable with checking your bank statement on a regular basis, I hate to break the news to you but you need to get comfortable – like real quick! You need to see how much money you spend on a daily/monthly basis!
By doing this, you can easily see if your expenses exceed your income. If they do you need to make a decision: (1) you can either make more money or (2) cut back and spend less money.
Step #3 – What is Your End Goal?
Ask yourself these questions:
- Why am I creating a budget
- What are my budgeting goals?
Why are you creating a budget?
I want to have financial freedom. I always talk about my dreams and aspirations, but if I do not write down my goals and develop a plan I will not have anything to show for it. Ultimately, my short-term goals consist of me paying off all of my credit cards. Once that is complete, I will shift my focus towards my long-term goal which is to pay off my student loans!
My credit card debt is astronomically high. To get out of debt, I need to have a plan of action.
A budget is a plan that helps your money work for you, instead of the other way around. You choose what your priorities are – no one else!
What are my budgeting goals?
As yourself basic questions and write them down. For me, I often asked myself where do you want to be financially in five or ten years from now? Do you want to be debt-free? Would you like to be able to pay in cash for everything and not worry about repaying a creditor?
If you need help with creating a budget, click this link to purchase budgeting printables today!