Having a budget is so important. However, it’s one thing to think it’s a good idea to have a budget and another to actually set one up and follow it. Creating a successful budget isn’t as hard as it might seem though. It really boils down to four easy steps.
1. Know your expenses. If you don’t know exactly what your expenses are, how can you plan for them? Before you sit down to plan your budget, track your expenses for a few weeks. Not only will you need these numbers to prepare your actual budget, but it will also let you know where you’re spending your money.
2. Know Your Income. Obviously, you can’t budget your income if you don’t know how much it is and what type of pay schedule you have. Weekly and bi-weekly schedules are the easiest to budget for. Irregular or Monthly pay tend to take a bit more work, but don’t have to be extraordinarily hard.
3. Cut Your Expenses. Before you put pen to paper or fingers to keyboard to set up your budget, take a second look at your expenses. Is there anything that is too high? If so, take a look at cutting that cost out of your budget. Chances are it isn’t something you desperately need anyhow and you’ll be grateful for the saved money. For me, it was my daily trip to the local coffee shop.
4. Divide it Up. Once you’ve completed the first three steps, it’s time to start laying out your income to pay your expenses. If you don’t have enough income? Drop your expenses. If you still can’t make it? Take a second job. Ideally, you’ll want your budget to equal a zero dollar amount left over so if you have more income than expenses, start stashing that money into your savings accounts!
Making your budget work for you can seem like a very daunting task, but it doesn’t have to be. The biggest thing to remember is that every family will have different budget needs. Your budget needs to work for YOU. Follow the four steps above and soon, you’ll have a personalized budget that works very well for your family. Stick to your budget and eventually, your bank accounts will overflow!