First things first, let's get one thing clear: Budgeting doesn't have to be scary or stressful. Instead of thinking of budgeting as watching your money go straight to bills, think of it as a plan for your money. You can plan for things like a vacation fund or a splurge on a new wardrobe, it's not all car payments and expenses.
"A budget is telling your money where to go, instead of wondering where it went." - Dave Ramsey
Excel spreadsheet? Handwritten notebook? The tool you'll use for your budget needs to be something that you will actually maintain. If using a spreadsheet seems too overwhelming and you prefer to write it down, then there's nothing wrong with old fashioned pen and paper.
Whether it's to reduce credit card debt, to create a collage fund for your baby, or to take a luxury family vacation, start by brainstorming what your goals are. Even if it feels like there is not enough money coming in to support your goals, it's important to identify what they are.
Maybe you have a short term goal of saving money for soccer sign ups and a longer term goal of a new car. Identify the longer term goals so you won't have to worry about trying to reach an impossible goal. Make sure your goals are realistic for the time frame.
Identify what money you have coming in and then add up your current expenses. If you're not keeping your receipts, then you'll have to go back and check your bank statements. Start by making a list of all your fixed expenses like your mortgage and house payment. Then start to tally up how much you're spending on food and activities.
Once you've added up your expenses, it can be pretty eye-opening to see where your money is going. Take a hard look at what are actual needs vs. what are actual wants. Are your 'wants' supporting your goal? If not, you may need to adjust.
When creating your budget, make sure you include everything! Even if it's not a monthly expense, like car tabs for example, account for it in your monthly budget. That way when it's time to shell out the money, you're prepared because you've been saving for it. Don't forget to set aside extra money for savings and unplanned expenses.
Now that you've created your budget, you need to see where your money is really going. Save your receipts - your saved receipts may even come in handy at tax time too! Check out this interesting article from lifehack.org on 25 Unnecessary Wastes of Money...
Your budget is not written in stone, so it's okay to make changes as you go. If you find yourself overspending in one category, designate more money to that category or see where you can cut down. Or if you have money left over each month, save more or apply more to your goal.
You're not going to stick to your budget perfectly the first month. It will take time as you fine tune your expenses. Don't stress yourself and definitely don't feel guilty if you overspend.
You might feel pressure when you see friends buying new cars and homes, but if it's not part of your goal or you're not ready for the extra expense, stick to your budget. Remember, you don't know their financial situation, so don't try to compete.
Remember, budgeting doesn't have to be scary. Wouldn't it be nice to have some financial freedom? Follow the above steps and we hope you'll be on your way to reaching your financial goals.
Tell us: What's your best budgeting advice?