Are you ready to make a budget?
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Not sure where to start? I have you covered with 7 easy steps on how to make a budget for the first time.
I know, I know, I can hear some of the comments now.
‘But budgeting takes the fun out of life!’
‘Doing a budget it too stressful!’
‘I don’t need to budget, I am doing just fine with my money’.
‘Budgeting takes too much time’.
‘I am not an accountant’.
‘A budget now?? I have better things to do!’
‘Budget should be a 4 letter word!’
Whoa! Do not get too carried away. First, let us agree on a definition for the word budget. For our purposes here, a budget is simply a written down plan for your money, basically you are telling your money where to go.
If you remember from My Debt Free Story part 1 and part 2, when I tried to set up a budget, it would result in extreme anxiety and lots of stress!
So why would I be encouraging you to make a budget if it is so stressful? Well, once I learned how to properly make a budget and what a budget actually is (just a plan), I realized that sticking to a budget helped me obtain my financial goals much quicker! I grew to appreciate the budget and it has become another chore I have to do, rather than being hated or feared.
You do not have to continue to be pushed around and beat up by the monthly bills and debt payments, leaving you broke at the end of the month and frustrated because you were not able to save some money or get ahead. It is time to step up in order to regain some control over your finances.
It is time to make your first budget!
A Budget in 7 Easy Steps
1. Get your supplies together
I like to have hot tea, relaxing music, a pad of paper, a pencil, colored highlighters or pencils and a timer set for an hour (you can also use a computer program- Excel or Word if you prefer).
2. Write down your monthly income at the top of the paper
Combine your income with your spouse’s if you are married and write down the monthly take-home amount. This is the amount you have to work with when you are making your budget.
3.Write down all of your monthly expenses in categories
Do not forget to include how much you spend buying clothes, eating out, insurance, medical expenses, date money, and fun money. Fill in all the amounts for each category as you know them. If you are not quite sure of the amount, do not worry, we will get to that step later.
4.Log in to your bank account online
Print out all the transactions from the last month.
5.Ready to color?
I like to use different colored pencils or highlighters to group my transactions into like categories. Go through the statement and start marking all of the same types of transactions with the same color. I marked gas purchases in green and groceries in yellow.
6. Add the transactions that you grouped together by color and get a total
Now, take those totals and add the name of the category to your itemized budget from step 2. Did you find a couple items/categories that you had forgotten?
7. Add all your expenses and subtract from your income
The goal is to break even or better yet to have money left over after all your expenses have been deducted.
Put down your pencil. You did it! You just made your first budget! Take a deep breath and pat yourself on the back. Making a budget was not all that hard, now was it?
I want you to set aside the budget for now, but do not lose it. I will be sharing how to tweak your budget in the next article of this series. Too much budgeting at one time is never a good thing!
If you want some actual budget forms to use, there are some in the back of The%20Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness” target=”_blank”>The Total Money Makeover (affiliate link) or on DaveRamsey.com.
The longer I work my budget, the more I find that the budget is not something scary, but rather a tool that I can use to control my spending. I have found the stress of budgeting subsiding over time. Using a budget has enabled us to not only get out of debt, but to live within our means, afford various trips and school tuition on a on-going basis. I plan for larger purchases and then have no regret once I make the purchase.
It does take some time and work to get a budget working for you on a monthly basis plus developing the discipline to stick to it, but hang in there! Following a budget is so worth it! We can do this together, ok?
What are your biggest objections to budgeting? Did you take the plunge and make a budget for the first time? Leave a comment and tell me about it.
This post was shared at Tip Tuesday, Simple Lives Thursdays, Thrifty Thursday, and Fridays Blog Booster Party.
Like this post? Check out all the rest in :
- How to Set Up A Budget Series
Hi! I’m Charissa. I’m on a mission to help hardworking women overcome money struggles and gain financial peace with a Biblical perspective so they can have the freedom to impact their families and communities. Ready to make some changes that will impact your finances in 2020? Click here to get a free worksheet to help you make it happen!
I think the idea of making a budget is super intimidating, but I can’t believe how simple and easy you laid it out. I never thought the idea of making a budget could seem so doable for someone like ME! THANK YOU!
Valerie, Yay! That is my goal to take the scary out of budgeting. I am so glad budgeting now looks simple and easy. It is totally doable especially for someone like you! Now, take the next step and sit down to make your budget. You can do it! I know you can. If you need help or run into a snag, let me know and I would be happy to help!
I like your idea of telling money where to go. Very wise advice here.
Telling my money where to go has been the biggest reason I remain debt free to this day.
Debbie Rodrigues says
I have never been a big spender (except the year I bought my Dollfies), but I am now even more careful than before. Thanks a lot for the tips. I pinned them for later.
I had to look up Dollfies… :-). Just curious, why are you more careful now with your spending? Was there something that happened which made you more intentional with your money? Thanks for pinning the tips!
Debbie Rodrigues says
Hi Charissa, I just decided to invest more in my blog, my part-time career (as a Personal Trainer and Reiki Therapist) and increase my savings. Not only buying things.
Debbie, thanks for the reply! Awesome, those are great goals and being careful with your spending will give you the margin you need to accomplish the desired life changes.
I like how your first budget works backward, with what you have already spent. I always start by estimating what I “should” be spending in each category. Also, I spend so much time working on it when I start, that I get frustrated and overwhelmed, then never go back to it, so the timer thing is genius! Thanks, Charissa!
Sometimes it is easier to see what you are already spending and then adjust categories/amounts as needed. I have done the same thing with putting off working on the budget so long, there is so much to do, I can’t do it all in one sitting and the stress is terrible! Using the timer and setting time aside once a week or two to work on the budget really help to keep it manageable. Good luck!