2. Find out what you spend to make a baseline budget
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You need to get a baseline budget to start with – this is simply what you are spending now in each category. Don’t worry about if it’s the right amount or if you are spending too much, we’ll address those in a bit.
Just write down all of your expenses and how much each bill is. This will be your baseline budget.
If you have absolutely no idea on what you currently spend on certain categories/expenses, use this simple trick.
- Look at your bank statements for the last month.
- Highlight/mark every transaction that took place for that category (i.e. groceries) with one color.
- Tally up the amount spent for that category.
- Put that amount down on your budget.
- Do that same process for all the categories that have varying amounts.
This is your baseline budget. Now, those budget category amounts are there just to tell you what you can spend for that category.
CLICK HERE TO GET YOUR FREE BASELINE SPENDING WORKSHEET
3. Reduce expenses
Once you have everything written down as a baseline budget, you may see that there are a couple categories that you can reduce. The more you reduce all of the regular expenses, the more margin you will have.
This margin will help when unexpected expenses come up or you can always put the extra towards the money dream you are working on, paying off debt or building savings.
My best tip to reducing expenses is to just tackle one category a month and see if and how you can save money in that area. Now that you know how much is in your baseline budget for each expense, you can focus on spending less in that certain category.
If it’s a fixed expense, for example internet, you can call around to see if a competitor has a better rate or see if there is any discount you can get.
Have you read the other posts in the series, 'Budgeting When Money is Tight'?
- 1. How to budget when you don't make enough money - I show you how you CAN budget when money is super tight!!
- 2. How to make a successful budget for your family once and for all - stop comparing your budget to everyone else's! If your budget is working for your family, then it's successful!
- 3. The real truth on how to make a remarkable budget - my biggest secret is consistency and I show you how it works!
Once you have lowered one category successfully, move on to trim the next category the following month. This way, you can continue to make progress on lowering your expenses without getting overwhelmed about trying to do it all at once.
Related:
What if your baseline budget is completely off? Is that the end of budgeting? No, a successful budget will need and should be adjusted. Here’s how…
My favorite way to make budget adjustments is next...
Like this post? Check out all the rest in:
- Budgeting When Money is Tight Series
- How to Set Up A Budget Series
- Successful Budget Tips 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!