The Ultimate Guide to Budgeting
Now that the Holidays are almost a blur, it is time to get back on track. For me, that means getting back on track with budgeting. You may have read my post about How We Paid Off $32,000 in Debt in Under 3 Months, well we used this Ultimate Guide to Budgeting in which I am about to share to do it.
If you don't have time to read this entire post now, because it is long, please consider pinning it to read later. This guide has helped us immensely with paying off debt, saving and having extra money to spend and give.
Know your money
The first step in this Ultimate Guide to Budgeting is to know your money. What I mean by this is you should know your exact monthly income, know your monthly expenses, know your savings and know your debt. Without knowing these things first, you cannot create an accurate budget.
In addition to knowing these things, you also need to know exactly how many bills you have each month, what they are and the dates that they are due. Using a calendar or an app that keeps track of these dates, as well as your paydays is very helpful. I use good old fashion pen and paper as well as an app called BillMinder. I found BillMinder on the app store and I believe it was free. This app has been a budgeting life saver for me.
Make a written budget
After you know your money, you have to make a budget and know where your money is going. I suggest you create a written budget. I learned to use a written budget by going through Dave Ramsey's Financial Peace University Class. Once we sat down and wrote out our budget we saw money we didn't even know we had.
To start your written budget, sit down and write down how much money you make each month. Then list all of your bills and expenses, ALL of them, including how much you spend on groceries, gas, coffee shops, eating out, shopping for clothes etc. You have to know exactly how much you are currently spending and how much you want to spend in each category to make the budget work.
Our budget is broken down like this ($0.00 in place of actual amount not in any particular order) I like to write everything out and see where it is going. You can also find some budgeting forms here on Dave Ramsey's website to make it easy for you if you are a beginner at budgeting.
Once you have your budget in place it is important to try not to deviate from it. For instance, if you give yourself $20 a week for lunch money once that $20 is gone you need to eat PB&J until your next payday. Doing this will help you stay on track. If you find that your bills are more than your income, you should consider cutting back in areas such as entertainment and spending money to ensure the necessities are taken care of.
Dave Ramsey suggests a zero based budget meaning all of your money each month has a name and is going toward something. You shouldn't have any "extra" money that has not been budgeted somewhere when you are finished writing your budget.
I personally like to keep a slush fund of $100 or so incase I messed up the budget somehow or if a bill is higher than usual in a particular month. I don't like to have to touch savings to pay a bill, this helps to keep me from doing that.
I want you to note that this post is simply about budgeting and does not address debt which I will write about in a future post. You can read the post I mentioned earlier which goes a little bit into how we handle our debts.
Review your budget often
I am so over the top that I literally look at my budget almost daily. You don't have to do this, but you should look at how it is going a couple of times a month. This will help you to see if you are staying on track or whether you need to make adjustments in any areas. Consistency is key, and once you get used to doing a budget, you will see that your money goes a lot further.
Before I end this already almost 800 character post, I want to give you a bonus tip. That tip is to start saving for the holidays now. Set a budget of how much you want to spend next Christmas and start saving toward it. This will help you have a stress free (well money wise anyway) holiday season in 2016!
Get started with the Dave Ramsey Plan and be on your way to financial freedom today. Get it here:
Do you budget?
Has this post inspired you to start?