Yes, today we’re going to be talking about the B-word… Budgeting!
It’s not a bad thing, although many people start off their financial journey thinking that it is. So let’s start at the beginning…
What is A Budget
A budget is many things but simply put a budget is a spending plan for your money. In order for your budget to be truly effective, you need to compare your projected budget (what you thought you’d spend) and your actual budget (what you spent).
Let’s Budget . . .
1. Write Down Your Income
Make a note of all your sources of income and how much you expect to bring in this month, including your salary/wage, monetary gifts, gift cards and any income from side hustles.
2. List Your Expenses
Choose categories that make the most sense for your situation. For example, some of my categories include rent, groceries, eating out, fuel and subscriptions. Start with your needs first and then add wants if there is room in your budget, that is when you have more income than you do expenses.
3. Plan for the Future
If you’re anything like me your on this financial journey to take charge of your finances so that you can have a more comfortable future. You want to see your savings and investments grow and watch your debts shrink. So, planning for the future includes paying down debt, saving and investing.
What are your short-term, midterm and long term financial goals? Once you’ve figured out what you’re striving for, set it up in your budget.
4. See what fits (and what doesn’t)
Using the zero-based budgeting method, your income should match your expenses and after everything is said and done you should be left with zero dollars in your budget.
What does that mean? It means that every dollar that you earn should have a job. Whether its job be paying a bill, saving, investing or paying down debt – every dollar should be allocated to one of your budgeting categories.
What get’s measured get’s managed
~ Peter Drucker
5. Track Expenses
Tracking your transactions is essential to making your budget work. At the end of the month you should be able to account for every dollar that passed through your accounts. This also allows you to create fancy graphs to show all of your amazing progress towards your financial freedom!
Plan Your Month Template
I want all of us to start winning with money and change our money story so here’s my gift to you – a FREE copy of the Plan Your Month budget template!