Creating a budget is easier than you think.
Budgets do not have to be hard or intimidating. You can create a budget to be easy or complex, look simple or be eye-appealing. Personally, I don’t have the “journaling touch” so mine is always simple. My husband, on the other hand, likes his technical so he creates his on Excel and it looks great and works even better.
For me, give me some envelopes and a piece of paper and I’m set. If you’re wondering what the envelopes are for, I’ll explain in a minute. For now, we are going to go through the steps of creating a budget. A simple one.
1. Figure out your net income per month.
2. List your fixed expenses (rent, utilities, car, etc).
3. List your variable expenses next (food, internet, clothing).
4. Assign an amount to each.
5. Consider each expense.
If you find there is just not enough left over after you have allocated money to your expenses, you may need to cut back. (You can read more budgeting tips in my article Tips to Stay on Budget & Save Money.) You may find there are areas you can cut back on or things you can eliminate. (Cable, extra car, cell phone plans.)
6. Divvy up remaining money into savings, spending, etc.
This is where I use my envelopes. When I planned my wedding, I had a very easy but extensive budget since I was paying for my wedding and paying for college at the same time. I took envelopes and designated them for various expenditures (invitations, favors, dress, etc.). I wrote the name of the expense on the envelope and how much I designated for it. Once I bought said items, if there was anything left over, I added it to one of the other envelopes.
This was a nice system for me because I handled the money myself, saw where everything went and loved being able to see how much I had left over due to my savings strategies. It’s a visual thing, you see? I understand not everyone has this kind of discipline. If you don’t, I recommend using Direct Deposit and an excel spreadsheet for your budget. Also, if you prefer to pay your bills online and only handle your spending with something like an envelope system, that can work, too.
What ever you use, having a budget is a great way to keep from going into debt. So many people never take the time to create one and then wonder why they can’t get out of debt or have enough money left over at the end of the week.
A budget helps you see what you have and don’t have. If you try to do it all in your head, you are going to get yourself into trouble financially. So, take the time to start a budget. Keep to your budget and enjoy the freedom you eventually earn from being disciplined.
What are some of your favorite budgeting tips? How do you prefer to keep a budget?