How to Set Up Your Budget

Budgeting isn’t sexy or fun, but it is oh so necessary… Unless you want to continue wondering where all your hard earned money went! Because you’re here, I know you’re the kind of person that wants to flourish in every area of your life — finances are a major component that flows into every other area!

Ask anyone who has gotten out of debt and built wealth what the biggest key to their success is and they will tell you the same thing: budget. Creating and sticking to a budget gives you the control to tell your money where you want it to go instead of it going where it wants (which is usually out of your wallet).

I am not a budget expert, but I have incorporated a budget into my life that I’ve stuck with for the last 3 or so years. It has changed and evolved of course, but I’ve remained friends with my trusty budget and it’s literally paid off throughout life’s changes.

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A glimpse at our monthly budget without the dollar amounts

Now lets get your budget created! To start, grab a piece of paper and a pen — we’re going to set up the outline to your budget by answering 6 questions. Are you ready!?

  1. Are you creating this budget for yourself or your family? Another way to ask is, are you married or single? Either way, the overall idea will be the same, but depending on your situation, the individual elements will be different. For example, if you’re married and your spouse has a car payment, that item needs to be on your family budget, but your boyfriend’s car payment wouldn’t be on your budget — make sense? This answer will also come into play with #6.
  2. What income do you bring in? Our income varies each month because Eric works as a server and mine can vary with commission. We have a base line amount and track what we’re actually bringing in each week. This is important because your income must outweigh your budget with any excess going towards your goals. Your income to budget ratio may tell you that you need to pick up a side job. Knowledge is power!
  3. What are your bills? What are their amounts and due dates? If this is your first time putting everything down on paper it may be hard to think about, but just start writing down every payment you can think of. This includes things like utilities, rent/mortgage, student loan payment, phone plan, insurance, gas, groceries — any payment you need to make each month. I make note if the bill is set up with auto draft (by using an asterik*), if it’s a varied or fixed amount (pinkish purple box), and I list them in order of their due date. You may prefer to list in order of priority. Either way will work.
  4. What debt do you owe? This is scary to do, but it’s important to know what you’re up against. Calcuate all of your debt. Student loans, car loans, credit cards, etc. Once you shed the light on your debt monster, you’ll be better prepared to attack it! This amount will shrink each month and you’ll be able to watch your progress.
  5. What are you spending? Sometimes we find ourselves wondering: where the heck did all that money go?? Track your spending. Tracking will allow you to identify where you can cut back and where each dollar is actually going. A lot of your money may be going towards bills, but if you’re not making progress on your financial goals, the excess is likely going everywhere else. Another benefit of tracking is that it’ll hold you more accountable to your budget — do you really want to spend that extra money on shoes or a meal out when it could be better used towards debt??
  6. What are your financial goals? I’ve mentioned goals throughout the previous questions, so they must be important. Set your goals! Do you want to be debt free by a certain date? Do you want to have a certain amount of money saved up? Do you want to pay off your house or car? I’m sure you have dreams, but until you write down your goals, they will continue to stay just that- dreams. I want to see those dreams become reality for you! 

This is the blueprint, but actually creating the foundation is up to you! It doesn’t matter how you create and manage your budget as long as you are consistant in sticking to it. A spreadsheet in GoogleDocs (as seen above) is what works for us, but we have friends that prefer using an app such as Every Dollar, Mint, You Need a Budget, and Good Budget. They all have the same purpose, so try something out to see what works. It may take some time to work out the kinks, but stick with it. It’ll take about 3 months for you to really nail down your budget and get comfortable, so if it’s not clicking right away, don’t worry!

Also, don’t be afraid to adjust as necessary based on your progress towards your goals. Things may come up where you have to tighten the budget or you meet goals and can relax a bit. Push yourself, but not so intensly that you give up. Consistency is key here!! Check in with your budget often and roll with it. I know you can do it!

Budgeting is the #1 way to financial freedom. It’s a plan that’ll take you from where you are now to where you want to be. Freedom, peace, ease, joy, relaxation — these can be your truth when you’re financially healthy. You have everything you need to be successful! Are you ready for it!?

Share: Do you have a budget? If not, when will you set aside time to answer these questions and create one? You’re on your way to financial freedom!

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