Budget – It’s not a bad word, but rather your new best friend helping you meeting meet your financial goals.
The idea of budgeting or “being on a budget” can have many different meanings. Some see it as cheap or a restriction, but I want you to change your mindset and see it as giving yourself permission to spend money you’ve earned.
In my opinion, God is my provider. He has provided me with everything I have or will ever need. I’m thankful for the way He has provided for my family to earn an income and I want to be a good steward of the things I’ve been given. So, think of money and budgeting as a no-brainer. It is the only way to financial freedom and success.
Where do I start? – Write a Budget
Start with pen and paper. Write your expected monthly income and your expected monthly expenses. Some categories that may be more difficult to estimate on a weekly or monthly basis. For us these categories were groceries, going out to eat and gasoline. Give yourself grace on determining these estimates, they will work themselves out during the next few months.
Make sure ever dollar has a place. You’ll want a zero-based budget. Any money left over after your monthly expenses are lined out needs to be put somewhere. My suggestion would be to put it into savings for a few months while you adjust to your new budget. Later on you can explore using excess to pay down debt quicker.
I’ve written a budget, now what? – Track your Expenses
Make sure you control your money and your money doesn’t control you. Remember all those categories you lined out for monthly expenses? Keep track of your transactions. There are several different ways to do this.
- Use Cash: If you budget $350 for food for the month, pull out the money either at the beginning of the month, weekly or by pay period. Once the cash is spent, you’re out of money for that category.
- Keep Receipts: Receipts are a great way to track your spending down to the item. These are also helpful in determining ways you could cut or increase your budget for future months.
- Written or Electronic Tracking: If taking cash out isn’t feasible, you could always input your receipts in a notebook, Excel spreadsheet or a budgeting software. I recommend using everydollar.com by Dave Ramsey Solutions. It’s helped us keep track of our expenses this past year and we love it.
End of the month and… ? – Evaluate and Repeat
Did your expenses and your income meet your expectations? If not, how can you tweak next months plan. Again, give yourself grace. It will take a few months to determine how much should be in each category and without fail, there will be an unexpected or forgotten expense pop up. My suggestion would be to save any extra money left at the end of the month for a few months. When you feel like you have your categories ironed out, then you now have a nice nest egg for rainy days and can start paying off debt with extra money.