Creating A Simple Budget You Can Stick To
It is normal to feel discouraged when you hear the daunting word budgeting. Maybe you’ve never tried to budget because you’re in so much debt that it seems pointless. Or perhaps you’ve attempted to stick to a budget only to fail, time and time again. No matter what has set you back in the past, budgeting is a critical part of short and long term financial health. Most importantly, creating a budget and sticking to it can be sustainable and straightforward when done right.
Step 1: Preparing Your Budget
Using someone else’s budget plan will not work because your income, expenses, and savings goals are unique, just like you! The first part of creating a budget that works is to create a list of all monthly income, expenses, and savings goals.
Look at all monthly expenses and classify them as wants or needs. This may be the hardest part! For example, an electric bill is a need, while a subscription to your favorite streaming service is a want. Reassess your income and expense situation after removing some of the unnecessary expenses. You may be able to add some of them back into your budget down the road in Step 3.
Once you’ve created a list where income can cover all expenses, you are ready to build a budget. We recommend that your budget answer the following questions:
- What goals will you achieve?
- Are the goals realistic and measurable?
- When will you achieve those goals?
Step 2: Executing Your Budget
Now that you’ve created a personalized budget, it is time to put it into action! Whether you do so using a spreadsheet or a budget app like Mint, log every expense and categorize it within one of your budget categories. Log all income, whether it is a paycheck or an allowance you receive.
Step 3: Evaluating Your Budget
Perhaps the essential part of being able to stick to a budget is reevaluating and modifying the budget as needed. As life situations change, we must prepare our finances to change with it.
Maybe you got that big promotion you’d been vying for. Or perhaps your car died, and you had to replace it. Many things will happen in life that can throw off a previously created budget. Don’t throw your budget in the trash just because life has changed. Be flexible and reassess monthly, or more frequently as your financial situation changes.
Congratulations on creating a personalized budget that you can stick with! For more information on improving your financial well-being, we welcome you to visit us here.