When it come to making a budget some people automatically think, “Boring” or “I don’t have the time to budget”. While making a budget isn’t the most exciting thing you may have to do, it is essential when trying to get out of debt. AND staying out of debt. The best part? It really is simple to start making a budget.
Write it down:
Skip using a spreadsheet or an app when first starting out. Use an old-fashioned pen and paper. And here’s why.
- Actually seeing where you are putting your money by writing it down can be eye opening. When my husband and I actually sat down and wrote out our first budget it helped us realize how much we were spending. Once we could see where our money was going we could make the changes needed to get our money under control. Knowing where your money is going instead just wondering where it went is a huge step in getting control of your money.
- If you are trying to learn the ins and outs of budgeting while having to constantly fidget with a software program is going to add to the stress learning how to use a budget. This is going to cause you to want to stop taking control of your money and give up before you have even started.
- Something physical, like paper, that can sit anywhere you can see it on a daily basis helps to keep that idea in your head. A software program that is on your phone/tablet/computer is closed unless you open it. And with how busy you are, chances are it is going to be something you don’t think about very often, because YOU DON’T SEE IT! The more you see it, the more you are going to remember it.
- The last reason to write it down? So you can easily make changes. Crossing out or erasing something you have already written helps make those changes you need to make so much easier. And you are going to make changes while making a budget. Everyone does, especially when starting out so it is nice to be able to make changes quickly.
Determine your monthly income
Now that you have your paper and pen, write down the amount of income that you are going to be bringing in for the month. Not, what you are going to be bringing home after you have paid some bill, but the entire amount you are going to be bringing home. This is any money from your regular employer plus and extra you might have coming in during the month.
Write out your budget
Now that we have the number for our budget, list the items that are going to be part of your budget. Things like:
Housing, Insurance, food, credit cards, tuition, car payments, toiletries, gas money, clothing, babysitting, savings, etc. Anything that is going to cost you money write it down.
If you have a bi-monthly pay check this can be done into two different list. The first check of the month pays the bills that are due first. The second paycheck of the month goes to the second set of bills that are due. Which brings us to-
Use a calendar while you budget
Looking at a calendar helps to remind you when bills are due. It can also help with reminding you of the extra bills you might have that month.
For example, in June we had a wedding, a family trip, scout camp and gymnastics camp and branding. All of those things are not normal for our monthly budget and are going to have to added to the monthly budget. This means that I am going to need to adjust other categories to make sure those cost are covered. For example: Our food budget goes up in June so our entertainment budget goes way down.
A calendar helps to show me where I am going to need to adjust my budget. It can also help me get started on the next month. Knowing that I will have bills to pay month to month can be written out in advance so they are not a huge surprise.
Find areas that you could be spending less in to get more from your budget
Now that the money is assigned to categories and you know where it is going, it’s time to figure out where we can trim spending.
Things like your mortgage/rent, insurance, car payments are usually fixed in stone. They most likely are not going to be changing and are going to be hard to squeeze any extra money out of. Things like groceries, entertainment, travel, clothing are things you can try and whittle down as far as you can to help pay down your bills faster. (Notice I did not say find a way to spend less in some areas so you spend it somewhere else. The idea is to get out of debt not spend grocery money on new shoes. No matter how many times I have wanted to.)
Does staying in and watching a movie at home help to save money rather than going to the movies? Yes. Does cooking an extra meal or two at home help to lower your eating out bill? Yes. While it may seen limiting, once you start giving up a few extra meals out you will be shocked at how much debt you are able to pay down.
The idea is to make sure that every dollar has a place, nothing is left hanging around with no assigned place.
- Write your budget down.
- Include all sources of income.
- Write out your expenses for the month.
- Add in extra activities that need to be added to your budget.
- Find ways to cut down on spending so you can add that money to your debt payoff.
Like I said at the start, a budget isn’t the most exciting thing that you will ever do but it is one of the most important! Just take a deep breath and realize it will take time to get use to a new habit. But in the end it will be worth it!