Ever Wonder What a Budget is, or How To Start One?

How to Start a Budget Today!

I know, budgeting, blah, blah, blah. Pretty boring topic, but oh so important!

Maybe you do have a budget, good for you! Great job! This post is for the people that say, I budget…sort of. Or, what’s a budget?

Here are the basic, easy-peasy steps to get you started on the right track!

Budgeting 101:

Step 1 – Sit down with your spouse/significant other and look at the numbers. This might actually be the hardest step. Managing finances as a couple is a big deal and can be tough to merge different personalities and beliefs about how money should and can be spent.

Also, some of us live in denial, we don’t want to examine the numbers because we are scared of what we will find and worry that life won’t be as exciting and lush; only focusing on what we might have to sacrifice or live without.

Step 2 - Figure out how much money is coming in every month.

Step 3 - Add up all your important bills (things like your mortgage, utilities, and insurances) and subtract that total from your monthly income.

Step 4 – Next, add in all living necessities (food, gas, and minimal clothing for example, and a small amount of savings). Now subtract this new total from your sum from step 3.

Step 5 – IF there is still money left you can now add in your wants (family activities, date nights, eating out, and extra clothes are some examples).

If, however, you ended step 3 or 4 with a big fat zero, you might need to look a little closer at your life style. Do you really need 100 cable TV channels, need to lease the newest car, or need a daily 32 oz soda? Can you live with basic cable or an antenna instead? Would you be willing to buy a used car that is a few years older? Could you buy a cheap case of soda instead, or slowly cut back on the amount of soda you drink? Your wallet and waistband will thank you!

Usually if you are totally out of money after step 3 or 4 it is because you are saddled with debt! Imagine using those payments towards something else! It’s possible, but you may have to eliminate a few luxuries, for a while, to climb out of the hole you’ve dug.

Like I said above, this is the barebones of how to start figuring out your budget, the first step in gaining control over your financial health.  I’ll go into more depth in future posts.

What financial issues do you struggle with or need help with?