It’s not hard to figure that people need to budget…most people intrinsically know that…what’s hard is setting up the plan and sticking to it. Building a better financial life is much like running a marathon (not that I’ve ever run for one!). You have the idea, the planning aspect, the training, then comes the actual run where at the end is your goal! I think I explained that correctly.
Building a better budget is the planning aspect and using it is the actual marathon! Analogies for the win! I’ve created a worksheet to help you through this process! You can get it now by Clicking Here
Alright enough with the analogies! Let’s get into these 5 easy steps to building a better budget and helping you stick to it.
Before we get started you’ll need a few items:
- Pay Check / Pay Stubs
- Bills
- Pencil
- Paper
- A worksheet like this one >>Click Here
- and a Calculator (cell phone calculators count)
Now let’s get the party started!
5 Easy Steps to Building a Better Budget
Step 1 : Income
In this step gather all sources of income that is to be included in this budget. That means your regular job, the side hustle, and spouses’ income (if you have one) as well. Tally up the after taxes and deductions amount (net income). Fill in the top boxes of the worksheet.
Be sure to count side hustles in your income for budgeting
Step 2: Setting up savings!
You gotta get paid for this hard work you do. Some personal finance gurus might tell you to do this after the payments come out but how likely is that to actually happen? You should pay yourself first so put some money in savings (preferably no less than 10%)
Step 3: “Fixed” expenses
These are the recurring bills that come every month, rain or shine. Whether you are home or on an awesome vacay with the girls. These must get paid or late fees and shut offs happen…awkward. I will say this: a lot of these expenses though nice are NOT necessary. If you need to find places to cut so you aren’t hemorrhaging money, looking at the fixed expenses is just as necessary as looking at the variable expenses.
Second thought on this is that debt falls into this category as well. Timely, consistent payments will help increase your credit score and reduce the amount you owe, as long as you don’t continue to add on more debt. You are trying to build wealth, right? You can not do that living in credit card debt. Best thing to do is pay it off. On to the next step!
Step 4: “Variable” expenses
Variable expenses are where the “bad” habits tend to drain your remaining income. I say “bad” because you can have anything in moderation to live a full happy life. Moderation is the key, and budgets help with that. So be sure to count the Starbucks trips, the Saturday brunches, the weekday lunches here. If you find that there are a lot of things here that you overspend on, start to consider ways to reduce it without making you feel deprived and rigid. An example is Starbucks…we all love Starbucks, right? But 5-$7 drinks in a week is $35 bucks! You could make some Coldbrew at home and bring it for a fraction of the cost! If you would like to discuss more tips feel free to send me an e-mail or follow me on Facebook.
Anything in Moderation to Live a Happy Life
Step 5: Review and Evaluate
After filling out the awesome worksheet that you can get by Clicking Here, it’s time to add it to an awesome money management app that follows you around like Mint. Live your life as normal for about a month and see how close or far off you are on your budget. This shows you where things might need to be readjusted. This will also show you where you are overspending and why your month might seem longer than your money.
After you make the adjustments to your budget it’s best to review your spending daily to get in the habit of minding your money. Do this for 60-90 days to really build the habit. After this 60-90 day period begin to schedule a day that you will go over your budget weekly and see where things need to be readjusted. You may see that your goals are getting much closer than you ever dreamed.
Review and Evaluate your #budget every 30 days
All in all building a better budget is definitely easier than you might think. Work through the steps with your goals in mind so you can live the life you dream. Do not worry about keeping up with the Jones’ because the Jones’ are broke! If you need help with this feel free to send me a message! I wouldn’t mind walking you through it!
Stop trying to keep up with the Jones’s because they’re broke!
Now it’s your turn! Have you begun working on your budget? Do you budget? Let me know in the comments! Also, be sure to share this post with your friends and loved ones so they can start living the life they dream!
