A Beginner's Guide to Budgeting
- Dec 12, 2017
- 2 min read
If you're JUST NOW budgeting then it's too late. Not really. It's the perfect time. Budgeting can be a wonderful, wonderful tool in your bag of money saving tricks to pull the reigns in on your finances. Looking to pay off an existing loan, buy a new car, or save up for that 65" TV for Christmas? BUDGET. You'll be surprised when you sit down and take a long hard look at your expenses to see just where it all goes, and how much of it could be better spent.
It’s good to construct a budget by separating it into main/sub categories.
Here's an example:
MAIN:
RENT/FIXED EXPENSES $1000
SUB: $200
-netflix
-gas
-clothing
-food
-entertainment
-personal
After that, you could sub it out even more by breaking it down and attaching dollar amounts to everything. Every cent has a place.
MAIN:
Rent-750
Auto Ins-140
Power-100
Phone-100
Water-15
Internet-40
SUB:
netflix-10
sling tv-20
movie night-50
food-200
Using this approach, you lay out all your expenses on the table under the microscope. From here you can determine what you think is a little too much, and areas that you can cut back on or cut completely. Remember-in making a budget, it will be daunting at first having to pick and choose things like if you'd rather cut back on the morning espressos or the netflix for the month. But by creating a budget and sticking to it, you will see your bank account (hopefully) stay above the red. and then use the difference to put straight into savings.
Here's the free PDF, give it a shot!
A FEW LAST THOUGHTS
The first month is iffy. If it's your first month budgeting, you'll be doing a lot of "guesstimating." There's a lot of room for error. And yes there will be a few errors. You may have not realized just how much you were spending on food daily. Or you may have thought that those daily stops by starbucks couldn't possibly amount to that much. After the first month, you'll be able to come up with more accurate numbers for each category-hang in there!
Each month varies. Life happens and unexpected expenses arise. Maybe you have to go to the doctor. Maybe you need a tux for a wedding. but if that happens, just do your best to adjust your budget that month and start fresh next month.
Every cent should have its place. Calculate how much you bring home any given month. If you're on commission and it varies, try to come up with an average. Once you do that, figure out how much will go into spending and how much into savings, and don't touch the savings. If you need a little extra one month, take it out of the starbucks or fast food category. Follow every cent until it finds a home. (It's a dangerous world out there, I'd hate for them to go missing if left unaccounted for!)
When you start thinking about how much you hate your budget, and you probably will. Remember why you started it. Think about your short (or long) term goals and just try to keep your eye on the prize. If it's still not working, reach out to us and we'll be glad to discuss a budget-friendly lifestyle together.
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