Some people excel at budgeting and some don’t. Which one are you?
So, you’re wanting to start budgeting and you don’t know where to start.
So many people feel they need all of the answers, or need to be perfect, or need to make X amount of money in order to start budgeting or need to dedicate two hours per night to budgeting in order to be successful.
Here’s the truth – it doesn’t take any of that.
You just have to start.
There are action steps that you can implement into your life NOW that will help you gain more clarity and confidence around your finances.
In this post, I will show you:
- small action steps you can take NOW and over the course of the next few months that will help you budget
These guidelines will be a great place to start and guide you through the first few months of budgeting.
Month 1
Print out the last 3 months of bank statements from the checking account where you spend your money
(if it’s multiple accounts, print all bank statements).
Then, go through and highlight every expense into different categories.
For example, highlight all food purchases red, highlight all transportation purchases purple, highlight all household purchases blue, etc.
Add up the expenses from each category, and that will give you a good idea of how much you really spend per category.
Write out each category you created and the amount you spent per month.
Next up: Head over to HERE to get your 3-Month Budget done for you.
If you’re tired of trying to do it all by yourself, let me help.
Let’s move on…
Month 2
Create your first budget.
Now that you’ve familiarized yourself a little bit with the budgeting method, it’s time to put your work into action.
Remember that your income – expenses= $0.
Now, this doesn’t mean that your checking account will equal $0…
It just means there is a plan for every single dollar.
I recommend implementing a checking account cushion, or buffer, into your budget.
For example, after each paycheck, leave $20 in your checking account as a cushion.
This is in case a bill is higher than you budgeted for or an unexpected bill comes up and will ultimately save you from overdraft fees.
Continue to track your spending this month and be sure to highlight per category.
At the end of every month you’re going to want to add up your expenses per category.
Month 3
Yes! You made it to month three!
Review your budget last month.
Were you over in any categories?
If so, ask yourself why.
Is it because you set an unrealistic budget amount?
Or did you overspend?
Tweak your budget as needed based on the trends you’re noticing.
Final step to make budgeting a habit: If you haven’t already, consider implementing cash envelopes into your budget.
Choose 3-4 categories that are trouble areas for you.
Some common ones are food, fun, gas, coffee, miscellaneous, etc.
Spending in cash allows you to set hard budget limits and forces you to ask the hard question –
“If I spend this money now, what am I giving up in the future?”
You are now well on your way to the rest of your budgeting journey, keep going!
It’s important to remember that your financial journey isn’t just about your finances. It’s also a self-discovery journey that will truly change your life.
That being said, it doesn’t change overnight. Don’t feel like you can’t start now because you don’t know all of the answers.
Next, read 7 mistakes you’re probably making that are DESTROYING your Budget & how to fix that!