Most times when people hear the word “budget”, they think “broke”. No, budgeting is a way for you to be more aware of your spending habits and allows you to identify areas that may need some improvement. Over the years, I’ve learned that people who make more money aren’t necessarily more financially stable. Making more money will not solve a “money issue”, focus and discipline will. Here are some initial steps to take when starting a budget:
List all of your monthly expenses with dollar amounts and break them up into categories.
Living Expenses: mortgage/rent, utilities, etc.
Transportation: gas, car note, car insurance, etc.
Food: groceries, dining out, etc.
Shopping: clothing, gifts, etc.
Lifestyle: gym, therapy, etc.
Giving: tithes, donations, etc.
**Each month may be different depending on how many variable versus fixed expenses you have. Variable = varies month to month. Fixed = stays the same each month.
2. Identify your monthly income.
3. Add up all of your expenses. Subtract that number from your income. (Ex: Monthly Income = $4,000. Monthly Expenses = $6,500. $4,000 - $6,500 = -$2,500)
If the result is a positive number, then you have money to use for savings, investments, future planning, etc.
If the result is a negative number, evaluate which expense(s) can be eliminated or reduced.
4. Eliminate/Reduce unnecessary expenses. What expenses can you get rid of or decrease and still live your life?
Cancel or decrease the number of subscriptions you have.
Cut back on eating out and cook more at home.
Cut back on shopping and/or start thrifting.
Call utility companies to ask for any specials to reduce costs.
5. Set your financial goal(s) and explore adding an additional stream of income.
How much money do you need in order to live comfortably and have money for the future? Starting small is better than not starting at all. What does living comfortably mean to you?
Do you have a passion that you could turn into a side hustle? Your business or side hustle doesn’t have to bring in thousands of dollars per month. Again, a small additional income is still more than no additional income at all.
6. Establish Budget Boundaries AND STICK TO THEM! Establishing and maintaining boundaries is already hard enough. Get comfortable with saying “no” to your friends, family, and even yourself. Think about your goals. Is buying that outfit or eating out every day worth you not achieving your goal(s)?
7. Identify how you wish to keep track of your budget. Some people prefer keeping their budget on paper. I prefer using an app so that I can see all of my accounts (checking, savings, credit, etc.) in one place. The app allows me to track every expense no matter where I am. This way, I can hold myself accountable in any setting and make my spending decisions based on my budget in real time.
8. Give yourself some grace. Change takes time and patience. Being disciplined requires
consistency, and no one is perfect. I always give myself 3 months to adjust to any major change. It takes time to get your budget groove. It won’t be easy, but it will be worth it!
There are many different ways to budget. I have found Dave Ramsey and Tiffany Aliche (The Budgetnista) to be very helpful during my financial journey. They both have free and paid resources to help you continue your budgeting journey!
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