My spouse and I have been talking about starting a budget for a while now. We live paycheck to paycheck on one income and it can get tough at times. Especially with two little ones to take care of. We need to find out where all our money goes and learn how to spend it wiser.
Getting out of the paycheck to paycheck rut is an important goal for us. Our lives would be less stressful if we could find a way to keep more money in our bank account each month. Starting a budget seems like the solution. We need to look at our finances and see what we need to spend. Then find where we can save money.
The problem with starting a budget is that we are terrible with money. Neither one of us is very good with budgeting. So, to start learning some tips and tricks I started following a few bloggers I found on Pinterest.
I found that a good place to start a budget is with the basics. Such as the basic outline for a budget and the categories you want to include. Here are some tips to help you create a simple budget.
The first place to start in the outline of your budget is with your income. If your income stays the same from month-to-month it should be easy to figure out what your monthly income is. If it’s not the same amount each month look at the last three months to estimate an average monthly income.
Next, figure out your monthly expenses. If they vary, figure out an average by looking at the last three months’ worth of expenses. For example, your power bill was $150 last month, $110 the month before, and $125 the month before that. Then you can estimate a monthly expense of around $128 for electricity. Or you can always take the highest amount, $150, and budget for that. It’s better to
It’s good to include enough detail in your budget that you have an idea of what you spend money on. But splitting your expenses into dozens of little categories will only frustrate you. So, try to make your categories general. Here is an example of how I broke our expenses down:
· Home (Rent)
· Food and Household Expenses (Groceries, Toilet Paper, Shampoo, etc.)
· Utilities (Power, Internet, Phone)
· Transportation (Car Payment, Car Insurance)
· Entertainment (Movies, Eating out)
· Other Debt (Medical, Credit Cards, Student Loans)
· Subscriptions (Netflix, Amazon Prime)
· Personal (Haircuts, clothing)
Here is an example of the Budget worksheet I use. It’s a PDF if you would like to print it out use it for yourself.
Are Expenses Greater Than Income?
Expenses should not exceed income. You may find yourself surprised the first time you do a budget. You may discover that you don’t make enough money to cover your expenses.
If your expenses are greater than your income you’ll need to see where you can decrease your expenses. Maybe cut back on how much you spend on groceries or cancel a monthly subscription. You’ll have to determine what you really need.
Wants vs. Needs
A way to cut back on expenses is deciding between wants and needs. Making this decision can be a hard one but it’s important for a budget to function. Beware of convincing yourself that a want is a need when it isn’t. You may be trying to find an excuse to buy the item. Real needs are things like clothes, food, and shelter. The newest iPhone, that Coach bag, or an upgrade to a bigger TV screen are more like wants!
Need More Income?
If your income is less than your expenses finding a side hustle you can do in your spare time can help cover those extra costs. That doesn’t mean you need to get a second job. There are ways to make money online without having to leave your home. Here’s a post about crowdsourcing sites where you can make extra income.
Get Everyone on Board
The more input you get from those affected by the budget, the more likely it is to work. Make sure you and your spouse are on the same page so there is no surprise spending. A budget affects everyone, and it’s a good idea to listen to the
Starting a Budget Takes Time
It takes a few months to iron out all the kinks in your budget and to make it a habit. There will be problems that need
Are you ready to get started on a budget? Are you overwhelmed? It can seem complicated at first. What do you want to accomplish with your budget?
The best thing to do is to know why you are starting a budget. Then to take the time to determine your expenses. Know what you want vs. what you need. Once you have this figured out you’ll be well on your way to starting a budget.
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