The word “budget” can sometimes (if not more often than not) have a negative connotation to it, in turn making it a bad word. It doesn’t have to be that way, though.
Doing a budget isn’t hard. Sticking to it is another story.
In this blog we wanted to go through and discuss 6 steps that you can take to budget and be successful at it.
1) Prepare
Preparing to budget can be very important. You need to do things like:
- Set a time and date for the conversation
- Figure out what you need – What supplies do you need for the month? What are you almost out of? How much do you need? Go through your pantry and see what you’re almost out of. Don’t depend on you to just remember it during the budget meeting when tensions are high.
2) Write Everything Down
This kind of goes along with the “prepare” part, but before the month begins, look through the next month and write down the following:
• When do you get paid and how much?
• What bills do you have, when are they due and how much do you owe? (include your minimum payments on any debt)
• What are other expenses that you have?
• Tithing
• Groceries
• Fuel
• Household Items (Do you need more toilet paper? Laundry soap?)
• Pet Supplies (Do you need to buy food for your pets? Do they have a vet appointment coming up?)
• Personal Hygiene (Do you need more shampoo, toothpaste, etc?)
• Auto Maintenance (Do you need new tires? An oil change?)
• Gifts (Does anyone have birthdays this month where you have to buy them a present?)
• Gym Membership
Also, go through and write down any seasonal expenses on a separate sheet. If you have bills that you pay once a quarter or once a year, this is where those would go.
It may be easiest to just open up your bank account or credit card statements and go line by line to see what’s coming out, when it’s coming out, and how much it is.
3) Split Everything Up By Payday
When actually sitting down and doing your budget, we recommend budgeting every paycheck instead of the for entire month.
Why? Because things come up and it’s easier to adjust every paycheck.
Our Kicking Debt budget spreadsheet or You Need a Budget is great for starting to budget for the entire month, but breaking it down by pay period.
4) Give Every Dollar a Job (AKA a Zero-Based Budget)
We’re not going to go through step by step on actually creating a budget on this podcast (we’ll have videos for that on our YouTube channel) but I did want to touch on what a zero based budget is.
With a zero-based budget, you’re tasked with giving every dollar a job. Simply take your income for the month then deduct your expenses until you reach $0 left to be budgeted.
It essentially makes sure you are allocating all of your income which in turn helps you plan better. If you see that you have $1000 left over after you budget for everything, you’re more likely to spend that money instead of saving it or paying off extra debt.
5) Look at Your Budget Before You Shop
Before you go into the grocery store for example, open up YNAB or your budgeting app and take a look at how much you have available to spend.
If you have $200 left in your budget for groceries and and you don’t get paid for another 2 weeks, you probably want to cut that in half if you’re shopping for the week.
Knowing that you have $100 to spend before you walk in the store will help keep you on task.
The goal is to always know what’s coming out of your budget so you don’t overspend.
6) Go With The Flow
No one’s perfect. You definitely won’t be perfect the first few times you do budget. Be flexible and don’t stress out if you overspend. It happens, and it will happen a good bit the first couple months of budgeting.
Instead, just take money from one category and move it over from another.
On the flip side, if you forgot to budget for something that you don’t HAVE to have immediately, hold off and wait till it’s budgeted for.
If Porscha came to me and said “I need more makeup”, usually it wasn’t something that she was completely out of and could wait a week or two.
