*This post may contain affiliate links.Creating a budget might seem simple but there can be a lot of variables. This is the most basic way to start following a budget. Things like unforseen expenses, pays cuts and things like that are the more complicated side of budgeting. Here is a simple way to start tracking your finances and spending habits to see where you can improve.
Budgeting was something that was pretty familiar to me from a young age thanks to my parents. They recommended I get a job in high school to make my own spending money and I’ve never looked back. Again, I am a nerdy numbers person so this is also kind of fun for me but I’ll break it down and make it easy, even if you hate money and numbers.
- Figure out what you make in 1 month. Do not try to take your annual salary and divide it by 12. I say this because most people have jobs where you have PTO days, vacation days, unpaid days off, vacation time, weird pay schedules, etc. Just take what you make in 1 month (you might have to go back a few months and come up with a 3 month average).
- Figure out what you spend in 1 month. This is strictly BILLS. What is your rent/mortgage, electricity, car payment, grocery bills etc. I’m talking ONLY THE ESSENTIALS.
- List all of your additional expenditures. Hair, nails, gym, the bar/eating out, movies, shopping, etc. Also, consider things like medical bills and things that don’t come up every month.
- Next, do the math (income-expenses=left over money) and double check to see if you are spending more than you are making. This is how you create debt (usually with credit cards) and this can get out of control quick. STOP!
- If you have left over money, this should be going towards old debt or into a savings account.
- Now the fun part…..if you are really trying to create a realistic budget that you can stick to you need to be reasonable with your goals. Are you trying to save a lot or a little? What are you willing to give up? Look at your expenses list and find things that maybe you just don’t need. Or things that you can go every-other-month for. For example:
- Are you buying $25 of Starbucks each week, if so, maybe limit yourself to $15 or make coffee at home!
- Do you pay for a gym membership you don’t use?
- Are you shopping for things that aren’t needed right now?
- Are you paying a huge cable bill with lots of movie channels? Maybe turn those off for a few months.
- THE BIGGEST MONEY SAVER….are you going out to each a lot?! This is a budget destroyer. There is a million ways to save on groceries, it’s worth checking out!