You have to be willing to change your lifestyle before starting a budget. You will have to make changes and cut down on your expenses.
Before you start to make a budget you need to understand that it takes time. You will be tracking your spending over the course of time and will have to learn what you need to cut back on to achieve your goal. Trust me you will definitely see the rewards and benefits if you stick to it! To make it easier I have a monthly budget spreadsheet that you can download and edit to fit your life.
Steps on How to Make a Budget:
Keep track of all of your spending. You must write everything down. Honestly, you will be shocked when you see exactly where your money is going. You will also need to keep your receipts so that you do not forget any of your expenses. Doing this will help you to learn what your ‘necessary expenses’ are in a given period of time.
Create a list of necessary expenses. This will allow you to focus on what you need to be spending your money on each month like bills, utilities, necessities, etc. This list will paint you a picture of how much are spending. You will be able to see what is left over each month to start to grow your savings. Hopefully you will be able to see that your income is more than your expenses. If not then you need focus on other ways to cut back. You will need to make a separate list of every expense you have in a month. Here are some examples to write down. You can print out our Simple Budget Worksheet to make it easy for you!
- Credit Cards
- Car Payments
- Daily Expenses: Gasoline, parking, etc.
- Child Care
You can also adding a few miscellaneous categories for charity and particular savings goals.
Once you can clearly see everything written down it is easier to find out what expenses you will need to cut back on. Obviously you cannot change your mortgage or other monthly payments, but maybe you can save on your groceries or entertainment.
Tip: A great way to start is by checking out or Beginners Guide to Couponing. You can learn exactly how to save money on your groceries each month! Another great way to cut costs is by eliminating your cable and internet or going to a cheaper plan.
I was able to see after using the Simple Budget Worksheet that we spent too much money on entertainment. For us this included, going out to dinner, casual shopping, movies, etc. This doesn’t mean we cannot do any of these things anymore it just meant we had to keep it to a minimum.
Tip: Give yourself a weekly allowance. This will allow you to stay within your means. The best way of doing this is by taking out a certain amount of cash so that you cannot go over your allotted amount.
This entire process is trial and error. You will find that some things will and will not work for you and your lifestyle. The best part of how to make a budget is that you can alter it to fit your family’s needs.
More Ways to Save Money:
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Please share your tips on how to make a budget in the comments below!