How to Make a Budget
A budget (or cash flow plan) is singlehandedly the best, most proven way to win with money. Without one you’re often exposed financially without a proper and clear understanding of where YOUR money is going and it leaves you feeling stressed and frustrated. People who use a budget experience less stress and more control over their finances. Here’s how to get started:
1. Write down all your income. This would be your total take home pay after taxes. This would include; full or part time job checks, Social Security checks, any and all ongoing forms of payment. If you’re married you should combine your income streams so you have a comprehensive understanding of everything.
2. Write down all your expenses. This would be your regular monthly bills (electricity, mortgage, rent, debt payments, etc) AND your irregular bills (insurance, HOA, etc). After that total your groceries, gas, entertainment, and clothing expenses for the month. EVERY DOLLAR SPENT SHOULD BE ACCOUNTED FOR.
3. Subtract your expenses from your income until it equals zero. This is called zero-based budgeting. When this happens you now have a clear understanding of where all the money is going because you told it where to go before it went. TIP - If you have any "left-over" money tell it where to go as well. Put it in savings, a larger payment toward debt, sinking fund for car repairs, etc.
4. Track your spending each month. Once you’re done, track it. Watch your bank account regularly so you can see how things are coming and going. If you check social media regularly include checking your bank account as well. Right after you look at Facebook look at your bank account. It will help you see the rhythm of your budget and your understanding of where things are going will begin to emerge.
5. Don’t get discouraged! It may take you 90 days before you feel comfortable with it. Give yourself time as you learn how and as you start to see how all your money is moving. It’s like this for everyone!
Good luck and let me know if you need help!