Setting a Budget

Setting up a budget can be intimidating and overwhelming at first; however, it doesn’t have to be. If you don’t know where to start, here are a few steps in making a budget:

1. Figure out your earnings: How much do you make (after taxes) each month? You need to figure out how much money you have and earn when creating a budget. However, depending on your occupation and salary, it may be harder said than done. If you receive irregular income, average out the last 6-12 months of income and find the average. I like to underestimate potential earnings than overestimate when creating a budget if earnings are unpredictable.

2. Calculate your expenses: How much is your rent? Electric? Heating? Cable? Student Loans? Car Expenses? Figure out all your monthly set expenses for the month. Also, figure out how much you spend on monthly living expenses like groceries, clothes, etc. Look at your debit card/credit card charges from the past to get a better idea. If you have a hard time keeping track, consider keeping a daily tally on the fridge to figure out how much you spend on living expenses. When I first started tracking with my husband, we would both throw every receipt by the fridge until we knew how much to budget in each category for our living expenses.

3. Determine your worth: After you know what you earn, and what your expenses are… where are you? Do you like that number? Are you spending more than you are earning? What is your bottom line?

4. Set goals: Was step #3 an eye opener? Or are you right where you thought you’d be budget-wise? Either way, create goals to figure out where you’d like to be in the future and how much money you would like to save each month. Do you have debt to pay off? Do you have a savings goal? Set some money-saving goals because it makes staying on track with your budget much easier when you have a goal.

6. Find your method: There are a lot of great budget resources out there and finding the best method is a personal preferences. You may prefer the old school ledger style, keeping an excel sheet on your computer, or using websites like to help you keep track of your budget. Everyone is different when it comes to budget organization, so find something that works for you (and stick to it).

7. Make some cuts: I love budgets because you can see where you spend your money on clearly. It also helps you to see where you may be overspending and it can make cost cutting a little easier. Is your food budget way out of control because you spend $25 a week on coffee alone? Is it a better idea to buy a coffee pot and brew at home to save money? Your cost cutting may vary depending on your bottom line and what your saving goals are. Where can you shave the most money off? Cut cable? Cut your grocery store bill? Dine out less?

8. Make adjustments: Update and stay on track with your budget and don’t be afraid to make adjustments when needed. Gas prices change, your income may vary and so many other things may come up that you may need to adjust your bottom line. Don’t be afraid to make adjustments when needed to your budget to fit your current needs.

9. Update and be disciplined: Don’t forget about your budget after you make it. Update your budget often and pick a certain day of the week to update your budget. Stay on track with your budget and the best way to do so is to update your budget and stay disciplined to reach your goals!

I hope those 9 steps gave you an idea of how to start and make a budget. Please let me know in the comments below if you have any questions or have any tips to share.

Good luck and I hope you meet all your saving goals for 2015!

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