Did you know that 78 percent of people live paycheck-to-paycheck? That’s the statistic from a recent USA Today article. That means most of the people have too much month left at the end of their money. If you’re tired of being stressed out about money, you don’t have to be. You can get control and win with your money – you just need a plan! How many times have you thought, “I make too much to be in the financial position I am in?”
Your monthly budget is nothing more than telling your money where to go instead of wondering where it went. When you make a monthly budget, it can feel like you’ve gotten a raise because now you have a plan. A lot of folks feel overwhelmed when they set out to create a budget, but it’s not really all that hard. It’s not like you’re writing the budget for the federal government.
The first priorities of your budget should be: food, housing, utilities, and transportation. Everything else needs to get paid, but you need to have a prioritized plan. If you’ve never made a monthly budget before, there can be some growing pains. Just keep working on it and make adjustments as needed. After a couple of months (usually two-three), the monthly budget can take about 15 minutes to plan for the next month. The hardest part is taking that first step towards controlling your money.
If there is income left over after subtracting your expenses, you can do three things with it: spend it, save it, or give it away. If you don’t have an emergency fund, you should start building one. A beginner emergency fund is $500-$1,000, depending on your annual income. A fully-funded emergency fund is three to six months of expenses, regardless of your income. If you are in debt, any leftover money should go towards paying that down after establishing a beginner emergency fund.
Your budget can be created using software, an excel spreadsheet, or a piece of paper and a pen and calculator. You make two columns – one for income and the other for expenses. List all of your income in one column and all of your expenses in the other. If you are married, this includes your spouse’s income and income from any side jobs. Add up all of the income and then subtract the expenses. If you have money left over, add it to budget categories. If not, you have to cut expenses. If you have to cut expenses, be sure to cut wants and not needs. After making the adjustments, your budget for this month should balance and equal zero.
Once you have the budget created and balanced, track your spending to see where your money goes each month. Don’t spend any money unless it has a name attached to it. When you have a plan for your money, you have control over it instead of it controlling you. If the numbers aren’t working, have a budget committee meeting with your spouse (or accountability partner) to change the budget and re-balance it.
Each month is different, so you need to do a budget each month. The more you do it, the easier it becomes. Make a plan today for your money in order to be more successful in the long term. A working monthly budget is roadmap to your financial success!