A Beginner's Guide to Budgeting
Today I want to give you a glimpse into the fun world in which my mind lives, the world of budgeting. Some of you may cringe when you hear the word “budget”, but please don’t’! I promise you it isn’t something to be afraid of, or something that is “too complicated to conquer”. In fact, putting a budget into place will actually help you to achieve your financial goals! Now, I know many of you are already familiar with budgeting and already have a budget system in order (which is great!), so this post is more geared toward the person who needs help setting one up and being successful in doing so!
From the first time I actually started budgeting my money at twenty years old, I have had so many different systems and ideas set in place to try to track my spending. I first started out with an envelope system. I had a large white envelope labeled with the month on the front it, where I kept all of my receipts. At the end of the month, I would tally up how much that I actually spent. This system got old after a few months because I was sick of carrying around a giant envelope stuffed full with receipts that were making my pocketbook super bulky!
Think with me for a minute... Are you the “notebook-planner type of girl” that would benefit from a binder or something written on paper? Or are you the “tech-savy girl” who is always on her phone or computer and finds it easier to store her budget in excel so it’s fast and handy? The way you decide to budget your money is completely up to you, it’s a trial and error process. Now, lets get started…
When creating a budget, you are basically keeping a record of what you make and how much you are spending. It is a way to visualize where your money is actually going. I find that people who do not have a budget, tend to overspend and have little to no money left over to designate to savings. So lets kick that habit to the curb and create one! It’s SO simple!
Step 1: Create a list of your expenses per month. (Example: Rent $1,500) Make guesstimates on items you are unsure of. If you have a different electric bill every month, take the average over the last few months and make that your new monthly average. Make sure to include a column for savings (we will find ways to be able to add money here, don’t worry!)
Step 2: At the bottom of your list, write down how much you earn every month. If you are married, include your spouse’s income too.
Step 3: Subtract your average monthly expenses from your income per month to see what you have left over. If you find yourself with little to no money left over, it is okay! I will help you come up with ways to get out of this problem (in my future posts, so stay tuned!)
Here is an example of what it should look like…
Now that you have created your own budget, you will be in charge of keeping track of your spending. Watch for trends. When I first budgeted this way myself, I watched my “miscellaneous” budget rise and fall every month. It took me a good three to four months to be able to see where my “extra” money was going and to see where I really could cut back.
Creating a budget is easy, but keeping track of it is the KEY to unlock your success. This next coming month (starting on the 1st), I challenge you to keep a list of your miscellaneous spending for the entire month. In a separate part of your budget, write down EVERYTHING that you (and your spouse) spent, outside of your routine bills. At the end of the month, I want you to look back at your spending and see exactly where your money went. Did you end up spending your money wisely? In my next post, we will talk about ways to cut back on non-necessities and “recycle” some of that left over money to make it grow in your pocket! Sound good?! I think so too ;)
If you wish to receive a copy of the example excel spreadsheet that I created, I will gladly email it to you. Just leave me a comment letting me know that you want me to pass this along. Good luck, and remember, you got this!