Budgeting always makes me cringe but I’ve learned that budgeting is essential for a financially successful life. Let’s learn how to budget together so we can meet our financial goals
What are your financial goals? It’s important to think about this so you will be motivated to budget. Some of my goals are to pay off debt and stop living paycheck to paycheck
What is a budget?
A budget is essentially just a plan for your money. It shows you what money you have coming in and what money you are spending. It also tells you exactly what you are spending it on which is important
Why Should I start a budget?
To reach your money goals. We all have money goals whether it is paying off debt or just saving up for the cruise we want to go on. Budgeting will allow you to see where your money is going and how you can cut back and save if you need to.
To be aware of your spending. Budgeting makes you aware of where your money is going. If you’re trying to save money and you make a budget you can see that you are spending $150 a month on Starbucks trips. So now you are aware of it and can change it.
To plan where your money goes. If you have a budget it is essentially like telling every dollar what to do and where to go. If you don’t tell it where to go, it will disappear on stupid things and you will just be wasting money.
How do I set up a budget?
This first step in learning how to budget is to look at your income for the month. What money do you have coming in every month? This can be from your regular job or a side gig but record every penny you have coming in
The second step in learning how to budget is to look at your expenses. You want to record everything. Anything you pay for should be included in your expenses. I will cover a sample list of budget categories later in this blog post.
The last step in setting up your budget is to subtract all your expenses from your total income and see what is left. Hopefully it’s a positive number and that means you still have extra money to put towards your goals.
If it’s a negative number you need to look at cutting back on some of your expenses or finding a way to make more income.
What expense categories should I include?
- Housing like rent or mortgage
- House insurance
- Electric
- Trash
- Water
- Gas
- Car payment
- Childcare
- Groceries
- Eating out
- Car insurance
- Medical
- Dental
- Medication
- Subscriptions
- Entertainment
- Miscellaneous
- Credit card bills
- Debt payments
These are just some of the categories you may have. You will probably have more just based on your personal life and goals. Caroline Vencil has a blog post that lists a whole bunch of budget categories that you should check out here.
How to stick to your budget
Get an accountability partner.
To help you stick to your budget you need someone that is going to hold you accountable for your purchases and spending. If you are married it can be your spouse. If you are not married it could be a family member or friend who you trust. Just find someone you can go over your budget with and that will push you to make the right decisions.
Include some fun in your budget
If your budget is only bills and no fun you won’t want to stick to it. But if you budget in some fun, even if it is just $50 you will be more likely to want to stick to it and not spend crazily.
The hardest part of budgeting is sticking to the budget. Making a budget is fairly easy and with these steps you should be able to do it on your own.
I hope this article has helped you with how to budget. Leave a comment and let me know!
If you like this post you may want to go read some of my other posts like How to Improve you Mental Health