This is why we write it down–to see it and see where we can make changes for the better. This is just an example…ĭoes the result scare you? Make you feel relieved? Anxious? Incredulous? All emotions are completely fine. Please note, these numbers are for example ONLY. Your paper might look something like this: Take your income and subtract your expenses from the income amount. Next see how your income compares to your expenses. Then, below that, list all your expense categories and how much you are spending on each item. You can do a template on the computer later on (I have a budget template that I love), but for now stick to pen and paper.Īt the top, write what your baseline monthly income is. When you see it all in black and white, it is much harder to ignore. Writing a budget all down on a piece of paper really helps to drive home the need to make a budget work. Once you have your income and you know how much you spend (and on what) throughout a month, you can start to make conscious choices on where you money should go. Now comes the part where you actually make your Money Plan (aka budget). After the 30 days, see how much you have spent in each category.Ī Sample Budget to Help you Create a Budget Track what you spend your money on for 30 days. Option two is to start tracking every dollar that you spend, starting right now. And seeing how much you spent will let you know what to plan for in the coming months.Ģ. This will help you see how much you have spent in the past on each category. Give every item an expense name (groceries, utilities, fun, eating out, etc.) Then add up all the items in each category, for each month. Take a look at your bank account and credit card transactions for the last 3 months. So there are 2 good ways to tackle this piece.ġ. Some items you spend money on you should know right away–they are the same every month (things like Rent, car insurance, etc.)īut with other expenses, the monthly amount will change from month to month. Okay, here is where you can get a little caught up. You need accurate numbers to make an accurate plan. So it is okay to track income for a few weeks or a month to see where you stand. You need to know how much you have coming in.Īnd remember, learning to budget and managing money is meant for now and the long term. If you receive a lot of cash as income, and haven’t been good about tracking how much comes in, I want you to start tracking it right now. Then take the smallest amount from those three months and use that as your baseline income–the income we will work with.Īnything you get in future months above and beyond that number will be bonus. So what I want you to do is look at your income for the last three months, add up how much you brought in from the different sources in each of those months. If you are in this category your task here may be a little more difficult. Add your take home pay together and voila! You now know your income.įor others, this step may be harder–hourly jobs that change hours, self-employed jobs where income isn’t predictable, etc. In order to start your budget and know how to manage your money, you have to know how much you actually have to work with.įor some people, this is a no brainer–they get a steady, salaried paycheck that comes regularly during the month, or every two weeks, and it is always the same amount. Need to come back and read this later? Make sure to pin it where you can find it!Ĥ Steps to Preparing a Budget 1. So, how do you create your own Money Plan? The steps are actually pretty simple and I will walk you through them in this beginner’s guide to budgeting. Sticking to our budget is how we were able to payoff my husband’s dental school loans (over $300k of them!) in less than 3 years. Done.Ĭreating a Budget (or Money Plan) is the only way to get in control of your finances and realize your dreams. So if budget is the new B-word in your house, you can refer to it as The Money Plan. I promise, it isn’t that bad or that scary. The thing is, in order to stop living paycheck to paycheck, you need a plan for how to work with your money (and how to STOP working against your money and your goals).Īnd, you guessed it, that plan is also known as a BUDGET.ĭoes the word budget scare you? Make you want to run and hide? Feel like the worst chore on your to do list? Um, what?! That number is crazy high!! I don’t know about you, but I think that number needs to come down, like a lot. According to a recent study, 78% of Americans are living paycheck to paycheck.
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