For some strange reason, most people look at budgeting as a bad thing. Personally, I think budgeting is the path to wealth. If you don’t know how much money is flowing through your house, how can you really know how you stand financially? The answer would be to create a budget.
Quick and Easy Ways to Create a Budget
I created my first budget when I was 15, so budgeting is not new to me. It’s simply keeping track of how much comes in and how much goes out. I create a new budget each month because the amounts of certain items fluctuate from month to month.
I love Dave Ramsey’s philosophy regarding creating a budget. He states that your budget should have a zero balance when you are finished creating it. Having a zero balance means that you know where every single dollar is going for that month. If you’ve never heard of Dave Ramsey, click here to learn a little bit about him.
Let’s Get Started!
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Write down and total all of your income sources-paycheck, child support, alimony, part-time job, any other money that comes in consistently each month
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List and total your monthly expenses-mortgage, rent, car loan, insurance payments, charitable contributions, cable, gas, electric, water, sewer, cell phone, food, and debt payments.
- Subtract the total of your monthly expenses from your monthly income. The amount left over can be allocated to savings, paying down debt, charitable contributions, eating out, entertainment, vacations, birthdays, holidays, home maintenance, auto maintenance, or anything your heart desires. Just be sure to specify an amount to each category to help you stay on track for the month. When you are finished, your income and expenses should be the same amount. This is the zero-based budget.
Tips for Sticking to Your Budget
Now the key to sticking to a budget is tracking your expenses during the month. There are many ways you can do this. There is an envelope system where you put the money for each category in its own envelope and spend from there. When the money is gone, you have to wait for next month to replenish it. This system will keep you from overspending and will enable you to see how much money you are really spending in each category. If you run out of money in your grocery envelope too soon but have money left in your entertainment envelope at the end of the month, you can adjust the numbers for next month to include more money for groceries and less for entertainment.
You can also keep up with the balances in each category by using an Excel spreadsheet or a checkbook register. In this age of technology, there are also apps that you can put on your phone or tablet to keep track of purchases and balances. I like to use GoodBudget but there are many others out there for you to choose from. Search around for a good fit.
Know that it will take a few months to get a handle on your budget. Just keep tweaking it each month until it works for you.
What If It Doesn’t Work?
Now, what if your expenses exceed your income and you don’t have any money left over? That means that you are living above your means and need to find ways to either increase your income or reduce your debt. Read this post to learn how to begin living below your means.
Also, check out this post about paying off debt using the Snowball Method.
You now have the tools to create a budget and take charge of your finances. The question of the day is: Will you create a budget to secure your family’s future, or will you just continue to hope for the best?
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Great tips. Thanks for sharing 🙂
I’m glad you found it helpful!
Great article!! Love Dave Ramsey!!
Thank you! Me too! 🙂