For my personality, I like to focus on one big thing instead of several small things. I use cash envelopes, separate bank accounts, and cash flow expenses. They can be saved in cash envelopes, separate bank accounts, one bank account with a spreadsheet to track the amounts, or cash flowed. When you can’t “cash-flow” it, then you need to save for it with a sinking fund.ĭepending on your personality and how you handle your money will determine the best way for you to save for sinking funds. You can save money for these items or pay for them with cash in that month depending on your budget. This example is using excel because it was easier for me to show it this way that hand written.Ī sinking fund is simply saving for an expected expenses that doesn’t come up every month. We will use what is left over for our sinking funds and debt snowball. Then take your total income and subtract your total expenses.Īt this point, you should have some left. I want you to total your expenses on the sheet. You should have your income and expenses laid out on paper. **amounts are examples Step 5: Determine how much is left The next step is setting a reasonable amount for those categories. Ok, you have your income and set bills and now you see where your money has been going. So, let’s get busy and actually SEE where you money has been going. It’s hard and challenging and easier to ignore it and put your head in the sand.īUT that won’t get you to where you want to be long-term.
In order to change your behavior, you have to face the facts. This will be where you can cut costs and start to save money! So it is very important to not skip this step. When I did this, we were spending $1200 on food between groceries and eating out for a family of 4! Look at the past couple of months and see where your money really has been going. This will be food, restaurants, gas, entertainment, impulse shopping, Amazon, clothes, ect. You need to figure out where all the rest of your money has been going. ***amounts are examples Step 3: Discretionary spending On your paper under your income box, write down your expenses: If you are not sure about a bill that may fluctuate, like your power bill, look at your averages, then estimate a little higher. Make a list of all of these and their amounts. These bills really should be about the same every month. I want you to determine your set expenses, like rent/mortgage, power, water, TV, cell phone, insurance, car payment, credit cards, loans, and all other bills that come out every single month. I want you to go through at least the last month or three if you really want to get accurate numbers and figure out how much your expenses are. This is the really hard part but the MOST important part.
#BASIC HOUSEHOLD BUDGET FREE#
Get your FREE worksheet here and then let’s get to work:) After you get the hang of it in a couple of months, then you can switch to a spreadsheet or an app.īut seriously, just write it down for now.
There is something about writing it down that makes it feel more real. I highly recommend using pencil and paper for your first budget. So, now that we discussed why you need a budget, let’s get started on making one. Budgeting for Beginners: A Step-by-Step Guide When you start paying attention to every dollar, it quits flying out the window and you can use more of it. The issue most people have is that they don’t know where the money is going, so it feels like there is never enough. It’s very likely that you have more money than you realize. It’s a very eye-opening experience when you see the numbers on paper. Well, most people find that after doing their first budget, they feel like they got a RAISE! I certainly felt this way as well. You don’t have as much leeway in your spending and a small mistake or emergency could be devastating.
When you are on a tight budget or a low income, it is especially important to do a budget. It doesn’t matter if you make a lot or a little, your money will not work for you, if you don’t tell it where to go. If you don’t make a plan, then your money will leave you. A budget is simply a plan for your money. Get your FREE budget worksheet But how can I budget when I am broke?Įven if you make $35,000 a year or $350,000 a year, you must have a budget.
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