The word budget is not bad. For some, it is in the same category as a four-letter word. Whether you call it a spending plan, money plan, or financial blueprint, it is still a budget! Now let’s get started.
Creating a budget or spending plan is one of the best things you can do for your financial lifestyle. One that fits your needs and caters to your financial goals. I will help you get on the right track and create a budget you and your family can be proud of.
What you need to get started on your budget
- Your Income
- Your Fixed Expenses
- Your Variable Expenses
- Your Debt
- Savings Goals /Sinking Funds
It’s important to note that if you have a partner with whom you’re sharing your financial journey, do this process together. First, create your financial goals together, with you agreeing on how to reach them best. Then create a budget by writing down your recurring monthly expenses, variable expenses, and debt.
Before you start the budget, print out a copy of last month’s bank statement. Then, with different colored highlighters, highlight different categories and then add up the other categories.
For example, the yellow highlighter will highlight takeout food, the orange highlighter for grocery, the pink highlighter for debt payments, and so on.
When you finish, add each category to see how much you’ve spent in each category. Once you are privy to your spending habits, you can create a more accurate budget that you can stick to.
Income
Your income is very simple. Write down exactly how much money comes in each month. If it varies, look at your bank statement to see what was your lowest income average over the last three months, and use that as a starting point for your income. Don’t forget to include any side hustle income, alimony, or child support income you may receive.
Fixed Expenses
Write down your fixed expenses. Fixed expenses are costs that do not change and are recurring. Examples are rent, phone bills, internet, car payment, subscriptions, tithes or charitable giving, etc.
Variable Expenses
Variable Expenses are those recurring expenses that can vary from month to month. This looks like fuel, grocery, takeout, personal money, fun activities, household goods, etc.
Debt
Here is the good stuff. The stuff we plan to get mad at and rid of. This may be a good time to move your car note to this category. Include all monies owed: to Mom and Dad, to Sallie Mae (student loans), car payments, money owed on phones, unpaid medical expenses, and credit cards. Do not include a mortgage here if you have one.
Emergency Fund
Do you have one? Is it large? Is it barely there? If your goal is to pay off debt and you do not have a minimum of $2000 saved, this is the first thing you need to do. Next, you need to set yourself up to cover at least a minor emergency. Two thousand dollars isn’t a lot considering we are going through unprecedented times, so I would suggest a month or two of expenses saved.
Add a savings line to your budget and make it a priority.
We are living in very uncertain times. It is now more crucial than ever to spend your money wisely. I can’t think of a better day than today to write down your expenses and figure out what’s most important to you and your family.
Have questions about budgeting leave me a comment below.
