Budgeting. It’s not always a fun task, right? Well, while I wouldn’t constitute it as a fun task, it can be an easier and simpler task if you do it correctly. But what’s the correct way?
You have to learn how to budget.
Budgeting is a learned skill. It takes practice. It’s not something that you’re born knowing how to do. I wasn’t really taught to keep a budget, balance a checkbook, or to use other financial tools when I was growing up. We did a little bit in school but not enough to make me feel confident in doing those things. Then, when I started out on my own, I just had a debit card and I didn’t keep track of my account very closely.
So when my husband and I got married and we tried to put our finances together and start making choices together, it was challenging for me to see the importance of keeping track of everything.
Well, as I shared in Our Debt Free Story, the first step was getting on a budget. Well, we had tried budgeting, but we never really stuck to it, or it would be so “suffocating” that we wouldn’t want to follow it.
What is the goal of a budget?
First and foremost, a budget’s purpose is to tell your money where to go. It’s a tool for you to use to give each dollar a purpose and a job. It’s a way to track your spending and keep yourself accountable BEFORE you spend your money. The idea is that your money has a job BEFORE you spend it.
Secondly, a budget is a tool to help you spend within your means. If you only have $3,000 coming in this month, you only have $3,000 to spend. Simple.
How to create a budget.
So how do we actually go about making a budget?
1.) Start with writing down your income for the month.
Dave Ramsey recommends two things come out of your income before anything else. Tithing/Giving and Saving. It has been very important to us to tithe regularly. We’ve seen what happens when we don’t. When we were not giving, we didn’t always have enough money for the month. But that’s not the case when we give. When we tithe to our local church, even when we didn’t feel like we had enough money to do so, the month turned out a lot better. Plus, when we didn’t give, somehow, it seemed like we would spend the money anyway, like in a sudden car repair or a bill we didn’t expect.
3.) Write down expenses for the month.
Mortgage, utilities, insurance, food, transportation, clothing, etc. You know, all the the bills you have to pay in a month.
4.) Don’t forget to look at the month and months ahead.
Is there a birthday coming up? An anniversary? A Holiday? Don’t forget to plan for these things in advance and add them to your budget.
5.) Income – expenses = zero.
After subtracting your expenses from your income for the month, the number should be zero meaning, you have every dollar accounted for.
” Every dollar must have a name! That doesn’t mean you have zero dollars in your bank account at the end of the month—it just means you have zero dollars left over in your budget.” –Rachel Cruze
6.) Follow through.
Once you’ve done all this work to tell your money where to go, be sure to follow through with it. It won’t be perfect the first time. It probably will take several months of practice. Don’t be afraid to tweak things and make it work better the next time.
Handy Budget Tip + A Great Resource:
A great and easy way of keeping track of your spending on the go is with EveryDollar. This budgeting app was created by Dave Ramsey’s team. It’s simple to use and the best part is, it’s FREE! There is a plus version where you can connect it to your account for an added charge BUT, I believe EveryDollar PLUS is free for Financial Peace University students now! So get to it! 😉 ANOTHER added benefit of FPU.
Keep in mind, I am not being compensated for anything in this post. I did use Dave Ramsey’s website, blog posts and articles on budgeting for inspiration and information but I am not paid for any info/resources I provide in this article. I share these resources and ones like them to help you and to make your journey a little bit easier.
Do you have a budget? I’d love to hear how your budget has helped you win with money! And I hope this post encourages you to start a budget if you don’t have one already! And, if you want to learn more about budgeting, be sure to contact me and I’d be happy to help you to the best of my abilities.