As a budget lover, I find “budget setup time” appealing. However, I realize that it’s not quite as exciting to most. I totally get it.
Starting a budget, picking a format, and getting things in order can be overwhelming. Yet, I’m here to say that it is worth the effort!
A budget by definition is simply a written financial plan. We plan for about everything in life but can miss the mark with our finances by not giving them much attention. Budgeting is key in saving more money, avoiding paycheck-to-paycheck living, and finding freedom from the burden of debt.
I often use the phrase “what gets focused on gets done.” When you focus time and attention on a monthly budget, then you will find your goals will get accomplished. Intentionality will go a long way as you work to be more strategic with how you spend and save your money.
The beauty of a budget is that they enable you to gain control of your finances. Rather than think of the setup process as a daunting task, I’ve broken the process down into five easy peasy steps.
Step 1 – Income
You need to know what you have coming in each month in order to begin your budget. Think of everything from paychecks, bonuses, side money, commissions, monetary gifts, and the like. Brainstorm a bit and get it all written down so that you can see the whole picture. You may bring in more than you think!
Step 2 – Expenses
Bills and expenses are part of life. There are some that we can control and others that we cannot. In order to get a good idea of what you pay out each month, you will need to do a little research. Pull copies of your bills and begin to write down what you spend each month for all your utilities. An average will work just fine.
Next, you will need to look at your bank statements and figure out how much you approximately spend on gas, food, entertainment, and any other regular expenses.
Write all of this down and come up with your monthly expense amount.
Step 3 – Do the Math
Easy so far right? While there is some prep work with budgets, you only have to do the original set up once. Stay with me!
Let’s do a simple math problem with the info you figured out from Step 1 and 2.
Total Income – Total Expenses = the Money you’ve got left to spend or save!
Now that you have that amount, you can decide whether you need to nip and tuck in some areas in order to save or stretch your funds. You may even find that you are spot on!
Step 4 – Budget Format
Now that you have all your info written down, it is time to set up a budget format that you find easy to use. There are many budget options today including:
- Online programs
- Phone apps
- Old fashioned pen and paper
- Printables found online
We use an Excel spreadsheet in our home and the set up only took place in the beginning and it calculates the math for us. Works splendidly for us! No matter what method you choose, the budget format should be tailored to your preferences so it’s something you will stick with.
Step 5 – Monthly Task
Budgeting is easier than you may think! Our budget has allowed us to save money, and we’ve seen the fruits of our labor for years now.
Once you get set up, the time investment is minimal. Set a monthly task to review your budget and be sure that you are on track. You’ll get the hang of this budgeting thing in no time and will be on track to spend your money wisely, pay down debt, and save more in the process.
Hopefully, this 5 step process to set up a financial plan will inspire you to try it yourself. A budget helps you spend each dollar strategically rather than wondering where all your money went each month!
Latest posts by Kelly (see all)
- Why Regular Money Checkups Make all the Difference - June 25, 2020
- How to Save More Money - May 21, 2020
- Ready to Dump Some Debt? - March 12, 2020