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This post may contain affiliate links.
Learn how to budget, when you don’t know where to start.
Don’t let budgeting be a scary word. Think of it as you telling your money where to go. You get to delegate your money and make it work for you.
Your first couple of budgets will be works of abstract art with lines through things and numbers written in the margins. Don’t sweat it. After 2 or 3 budgets you will be a budget master.
Where do you start?
Gather up all your receipts for the last month. Why? You need to know where you are spending your money. Be honest and include all your receipts.
Next, gather up all your pay stubs or paperwork regarding your forms of income. You need to know how much money is coming in. Make sure you include all forms of income including benefits, side income, support payments, income assistance and etc.
Grab a piece of paper. Your budget doesn’t have to be fancy. If you are looking for something computerized and available on the go You Need A Budget is the program to have.
Now, at the top of the piece of paper write the month or the two week period you are budgeting for. If you are paid weekly and want to budget weekly that’s fine too.
Write down all the forms of income you have coming in and total it up.
Next, write down all your expenses for the time period you are budgeting. This will include rent or mortgage payments, gas, groceries, utilities, entertainment and etc. List them off in order of importance.
If you have debt payments write them down in the expenses area. Make sure to include the minimum payment amounts on the debts owing.
You want to make sure you have a roof over your head, your tummy is full and you have electricity, heat and water. So make sure those bills are paid in your budget.
Work through each expense and subtract the bill amount from your income total to make sure the bill gets paid. Go through each bill one by one subtracting the amount owing from the amount of money you have. This way you know where your money is going and how much money you really have.
Your budget will look something like this:
Monthly Budget: _________
Pay check $____________
Side Job $____________
Total Income $____________
(subtract your expenses from the income total)
– Rent/Mortgage $_____________
– Grocery Allowance $___________
– Utilities $______________
– Debt bill $____________
Money left over $____________
(put this left over money toward your debt snowball)
Everyone’s budget is different.
Your budget will be different from mine. My budget will be different from my neighbors. We all have different sources of income and different bills.
Your budget may balance, it may not. That is okay. You may forget to add something on your budget. This is okay, rework it and you know better for next time. Your goal is to make a balanced budget and pay your bills.
What if your budget doesn’t balance?
Take a big deep breathe. That is fine, it happens. Pay the important bills like shelter, food, utilities and look for ways to save money and ways to make money. Your goal is to have enough money to pay your bills and balance your budget.
What if there is money left over and you have debt?
If you have money left over after paying your bills and your minimum payments on you debt put this money toward your debt snowball.
A debt snowball is a rolling action of paying down your debt.
You write down all your debt bills from largest to smallest not including your mortgage. This is your debt snowball list.
You then put all your extra money towards the bill at the top of your debt snowball list till it is paid off. Then you work at paying off the next bill on the list and so on till all the bills are paid off.
Do you want to learn more about budgeting and debt snowball techniques?
Yes! You need to checkout The Total Money Makeover. This book is amazing and will change the way you look at and handle money.
Have a great day.