Sometimes keeping to a budget is so hard. At least for me it is. I’m going to assume it’s a small rail against authority, even though the authority is… myself.
Creating your own method for making a monthly budget can be be daunting at first. “Where do I begin?” “What should I put on it?” “How much am I going to need for each item.” “What if I forget something?” There are so many questions!
But don’t let the anxiety of creating one get in the way of your goals. This really is one of those things that is worth it in the long run. Short term pains, long term gains.
Let’s start by answering a few common budgeting questions:
- How do I get started?
- What do I put on my budget?
- How much goes into each category?
- What if I don’t have a consistent income?
- How do I break down my current and future money needs?
- What if I don’t have enough to go around?
- How do I pay off debt?
- What tools do I need?
How do I get started?
I find this one takes the longest amount of time to complete. Mainly because of the research involved. To create a reliable family budget, you need to know 1. what comes in each month from all sources. 2. what goes out and 3. to where. It really is only 3 categories, but there are so many parts to that so it can be a big list to gather.
First take a looks at all your bank accounts and make a list of your monthly household bills and common expenses. Then grab all the info for what income you bring in- like pay stubs or even simply a list of money going IN on your bank statement.
What do I put on my budget?
Expenses and income is the short answer. Now for the longer one… (This is not a complete list)
Expenses:
- rent/mortgage
- car payments
- gas
- food
- Utilities (electricity, phone, water, trash, tv, internet, propane)
- medical/student loan debt
- credit cards
- insurances
- retirement
- entertainment/ fun fund
- dining out
- vacation/ gift funds
- business expenses (like organization or licensing fees)
- personal (for things like haircuts, shoes, nails, clothing, makeup)
- childcare
- memberships (gyms, magazines, websites- Amazon, Netflix, Hulu, Youtube, etc…)
- Alimony/ child support
Income:
- Salary/ Hourly wages
- Investments/Interest
- Social Security
- Disability
- Gifts/Donations
- Grants/Student Loans
- Reverse Mortgage
- Capital gains
- Payments for hobbies or side jobs
- Rebates
After you get that list going, then you can categorize them into monthly, quarterly or yearly expenses. (For example: my trash bill only comes once every 3 months so I don’t have it in the budget every month, but it does go into the quarterly one. And I know in April I have to set aside an extra few hundred bucks for tax service expenses, so I can either put that into the budget every month to build up, or I can do one lump amount the month I need it. You customize it to fit your wants and needs.)
How much goes into each category?
The simplest way is to look at the past 2 months on your bank statements and fill in those amounts. If those numbers vary, like with a water or power bill, then round up a little bit.
Remember, at first these will just be guesstimates that you can streamline better over the next few months.
For the first month’s budget, try lumping some categories together. Like all household bills and all food expenses. The next month you can look back on it and either duplicate it as is, or try breaking it down a little bit more. You’ll find which ways work best for you.
What if I don’t have a consistent income?
This is where tracking the income part takes a lot of patience. The first month of a budget is always just a dry run and won’t be perfect. After you’ve had a few months of tracking your income you can get a better view of where you might be on average every month. This way you can project for the next months budget and just make small adjustments as you need to.
The easy way-> Every single time income goes into your pocket (or hands) write down 1. how much it was 2. the date and 3. where it came from. Do that for 3 months straight and you can easily see your income trend.
How do I break down my current and future money needs?
This is must for every budget. Needs come around, they always do. The check engine light comes on, you wake up to the heat or AC not working, the shower is cold, a tire blows, a hail storm knocks holes in your siding, etc…
Now not all needs are emergencies like those, some are just the life things that you want to come up, like buying a new car, going on a Disney cruise, retiring, taking a girls trip, renovating a kitchen, planning a wedding or going to college.
No matter what the future need will be, there only thing for sure is there needs to be money to deal with it!
Place a line on the expenses sheet for this. Either lump it into one big category like future expenses or emergency fund, or you can make separate lines for each one. I personally like to separate them so I know how much to play around with on each one every month .
What if I don’t have enough to go around?
The dreaded section…
Don’t worry though. This is usually the reason people start a budget in the first place. There are all sorts of ways to manage this.
Ask yourself a few questions here:
- Can I work more?
- Can I sell anything from around the house?
- Can I turn a hobby into profit?
- Can I cut out some of my expenses?
- Can I save on my current expenses?
Usually answering a few of these will manage the problem entirely. Let me give you a few examples of what I have personally done recently to fill in this gap.
- Instead of going to the movies, I got an HBOMAX subscription for a month to watch new releases. One month was $15, versus the $50 it would have been to take the family to the movie theater one time. I could have saved that $15 by not doing either.
- I sold some old textbooks on Bookscouter.com. Made $100 easy on only 2 books all in one afternoon!
- I sold some old decorative items that I didn’t love on the FB Marketplace. Only made about $75, but hey, it’s money.
- I started potting some of the produce that was going south. I saw this one on Pinterest and thought it sounded fake, but it really does work. Now any celery stalks, herbs, green onions and lettuce, sweet potatoes and even pineapple tops go into a pot so they can regrow. It’s not a ton of money, but it does work.
- Setting the thermostat to below 67* in the winter and above 75* in the summer. The difference in savings on this one was astronomical!! I can’t even say that enough. Compared to the year before, I saved almost $1000 this year doing this one thing alone. I can wear gripper socks and a sweater inside if it will save me a $100/month on the electric bill this winter.
- Buying groceries online. It took some getting used to, but getting them online actually helped cut down on the extraneous grocery store spending. Not only did I not pick up extra stuff, but the kids also didn’t have a chance to ask for extras. AND, using the online coupons that automatically apply to the purchases helped me save extra. A lot of stores offer gas rewards as well. So using them for online shopping and gas can almost double your savings.
- Meal prepping: I wrote a bit more about that one in this article. Seems like a duh move right? Eating out costs more. Make your food at home and save on those tipping fees and inflated costs.
How do I pay off debt?
This is a great line item for any budget. Even if all you can do is scratch together $5 a month for a debt payoff, its much better than having ZERO. Dave Ramsey has an easy to follow debt payoff plan that is so simple you’ll wonder why you didn’t think of it yourself. The basic premise, pay off your small debts first and gradually move on to the big stuff. He calls it the snowball way to build momentum.
When you build a debt payoff plan into your budget, you can get that snowball started to get rid of the debt for good. To do this you have to designate a space for it and then –> actually use it. Whether the line is labeled by the name of each credit card or debt account, or is just a large debt category you can manage it if you have a plan.
I heard on a podcast once, “If we fail to plan, then we plan to fail.” I don’t remember who said it or when, but I really liked it and it makes a lot of sense.
Some people make a whole new bank account for debt, others use a jar or envelope and place real cash into there. No one method is better than another. The only thing that is necessary is that it gets done for real. I use both the jar and account methods for saving. The jar is for vacation funds and the account is for emergency spending/ debt payoff.
I use the jar method for trips because I like to have cash on hand when vacationing, so I don’t feel the sting of it coming out of my bank account. It feels like frivolous spending money and for some reason makes it a much better vacation experience.
What tools do I need?
You really only need a pen and paper to get started, but once you get the ball rolling getting a planner will make it so much easier- and it looks nice and is easy to organize and file.
I like this Clever Fox one a lot. (I have a few Clever Fox organizers that I love) Clever Fox makes a ton of different types of planners and journals, but this one is great for a simple and easy to use budget. And the fact that it is undated is great.
It’s simple but it has a lot of features built in that will make your life A LOT easier.
I personally love this little pocket so so much.
This way you can just stick the bills you get right in there and keep them all organized and ready to be filed at the end of the month-> or the end of the year if that’s your method.
And it has multiple types of trackers and budget planners in it.
It really is an all-in-one kind of planner.
Another great one is the Limitless Mindset Budget Planner.
It has a bunch of the same features as the Clever Fox planner so there isn’t too much of a difference there, but it does have envelopes that are made specifically for budgeting and expense tracking which are nice and convenient so so easy to use.
I like the income tracker page the most. Having a page that allows you to add all the sources of income and their dates makes it a lot easier to get your budget straight and become more predictable.
If you have a budgeting trick please share it with me. I’m always looking for way to make my life easier.
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