Whether you’re saving up for that trip to Aruba or a mom who just wants to save a little green for the family, everyone needs to know how to create and stick with a budget. Creating an economic game plan can help you curb unnecessary spending, grow a nice emergency cushion in your savings account, and reduce your monthly stress around bill time.
To begin, you need to record your expenses for a month, which means you need to record every thing you buy. You need to know exact where each and every nickel goes so start hoarding receipts and carry a notebook to write down what you spend. Be as specific as possible. So if you spent $37 on Amazon, write down exactly what you bought. Towels? Books? A Beanie Baby collector case? Whatever it is, write it down. If you love creating Excel spreadsheets, go to town. When the month ends, you’ll be surprised at by all the weird and useless things your money is going to and also have a good idea of what your spending habits are.
After you collected your moolah data, you can move on to the next step: write down income and necessary expenses for the next year. If you need help with this step, check out this form to help you out. Now, subtract your expenses from your income.
How’s it look? Is your income greater than your expenses? If so, welcome to an elite minority of budgeting gods. Take your leftovers and put it towards a rainy day, repay a student loan, place it in a retirement plan, or hide it under your mattress.
However, if you’re like the rest of us, your expenses outweigh your income by a fair margin. Don’t freak out, now that you know where your income is going, you can plug up the holes your money’s flowing through. Where you can realistically cut your budget (i.e. that Beanie Baby collectors case and the Batman vase you swore was a gift), do so. A great place to start is the grocery expenses. Once again be realistic, you can’t feed a family of 6 on a $77 a month budget.
If your budget cuts still can’t cover your basic expenses, you need to start thinking about ways to increase your income. Selling things on eBay, becoming a house-sitter/babysitter/pet-sitter, or getting another job are all good options.
While a budget is fluid and shouldn’t rule your life, you should follow it as closely as possible. Some months you may not be able to stick to your plan; cars need repairs, houses flood, or someone knocks over the Batman vase so you have to replace it. But by keeping a budget in mind when you spend, you will continually move closer to your economic goals. Remember, you’re in control of your budget, so if it’s not working for you, you have the power to adjust it.
Looking for a great on-line tool that connects to your bank account and does all the math for you? Try Mint and start budgeting like a boss.
Have any budgeting suggestions that have helped you in the past? Share below!