How To Make A Budget

Trying to figure out how to make a budget? Managing your finances can be as difficult as losing weight. You get the same frustrations and you go through similar struggles. There is also a lot of trial and error along the way until you find which one works best for you. The bottom line here is that you are off to a good start if you have an earnest intention of keeping your financial status in great shape.

With that willingness to change your financial lifestyle, you also have to be prepared to shake up your pocket and experience a little challenge to your financial world. Now, if you are up to that challenge, read on. But before you even start thinking about how to make a budget, you'll have to figure out which budget style fits you. Only then can you gear yourself with commitment and dedication to really achieve your goal.

Going back to the analogy we used earlier, just thinking of the word budget makes me think of "going without"... the same way a diet does. As hard as it is, it's time to change your mindset. Diets aren't enjoyable but we stick to them (most of the time) because we have a goal and we know how good we'll feel when we achieve our goal weight. Instead of losing pounds, you're saving money and that can be just as rewarding if not more.

What is the first thing you're told when trying to lose weight? Write down everything you eat! It helps you keep track of the calories you're consuming and keeps you accountable. It's the same with budgeting. How to make a budget starts with keeping track of all of your expenses. You will be amazed when you notice what you are really spending your money on. You've heard me use this example before but just one large coffee a day can add up to nearly $1000 per year!

You can start keeping track of your expenses by saving all of your receipts for a month. This way, you will really get an idea of where all of your money is going. Then you can make a list of all of your necessary expenses. This will pave the way to growing your savings. Once you know what your necessary expenses are, how to make a budget is easy. With the information that you have, you are now aware how much money you regularly spend for every category. Therefore, you now have a clear picture of how much money you are making and spending each month. This is your income and expenses. If your calculations show that there is more income than expenses, then you are in a good position to succeed in your budget. That's the good news.

If you're like me, this was not usually the case. Instead it seemed like there was so much more going out than coming in. If you're in the same boat, this is when you'll need to make some big changes. But how do you do that? Just how do you make a budget that works?

Unless you're in a position to work more hours or get a second job, you'll probably have to make some cuts to your expenses. Don't worry, most of the time you'll hardly miss them! In fact, when I made my budget I actually found that I had more money for the things I wanted as well as for the things I needed.

First make a list of the expenses you have every month. These will include things like:

  • Mortgage or Rent
  • Car payment
  • Utilities (a ballpark estimate is fine)
  • Credit cards
  • Groceries
  • Gasoline
  • Child care
  • Entertainment

This is not an all inclusive list. You may have more or less expenses. Just alter your budget to fit your own situation. This is the beginning to how to make a budget.

When everything is written down, it's a lot easier to determine which are constant expenses, such as your mortgage and car payment and which are the variable ones like groceries and entertainment. This simplifies the whole process because you can now play with those unnecessary expenses and focus on the priority list.

This would mean having to cut on less important things. Although it may hurt a little, you need to make some adjustments to keep you from falling off the budget wagon. Then you can review your budget on a regular basis to make sure that you are staying on track.

There are several different kinds of budget strategies. How to make a budget and which budget strategy you use will depend on what works best for you.

You can find some budget worksheets here.

You're probably wondering how I ended up with more spendable cash in my own budget. The first step in how to make a budget for us was to get rid of the things that we really didn't use. It's like when you do a big Spring cleaning. The rule of thumb is if you haven't used it in six months or a year, you don't need it. I also figured out if it was costing us more money than giving us a service we used.

We never use our land line phone. In fact, the only calls that came in were from telemarketers and the occasional credit agency. If anyone we knew called, they always used our cell phones. So this was a no brainer. We got rid of our land line. That saved us about $50 per month. We also got rid of the movie channels on our satellite television package. We almost never used them. At least not enough to justify the cost. Another no brainer!

When we went grocery shopping before, we always made a list. Of course, that didn't stop me from tossing just about anything that caught my eye into the cart. I was a sucker for good advertising. Now we make a menu for the week and make our list according to the ingredients we needed. I can't even tell you how much this saves us every month. And we're not eating hot dogs and mac and cheese every night either. We are eating good, nutritious food.

When deciding how to make a budget, the biggest change we made was to allocate a weekly allowance to both me and my husband. A pretty hefty allowance at that. By having an allowance, I can chose to save that money or spend it on whatever I want. My husband has the same choice.

Aside from the allowance, we did not touch the money that was left over after paying bills. By this point, we had a very good idea of our monthly expenses. I adjusted my direct deposit to deposit a little over that amount into our checking account and the rest automatically went into our savings account.

If I don't see it, I don't miss it. Instead of always wondering "Where did all the money go?", I know exactly where it goes and I'm much better at keeping myself accountable. Just like losing weight successfully on a diet, that money in savings gives me a sense of accomplishment. Honestly, it can be addictive.

And that's how to make a budget!

Use these helpful budget worksheets, to keep you on track while you are sorting out your finances.

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