In this post, learn how to create the right budget for your lifestyle in 5 easy steps. By the end of the article you'll have the essentials down, and you'll be ready to go!
No matter how intimidating or comforting it may seem to be in the dark about your finances, it's better to know where you stand. Keeping a budget helps you clearly understand your goals and the steps you need to take to reach them. It offers a way to keep track of your spending, notice suspicious activity (if any), and immediate feedback on how you're progressing.
Step no.1: Determine Your Income | Track Your Spending
Before you set a budget, a financial diet, you'll want to know how much you make and your spending habits. We aren't called consumers for nothing. In order to do this you will need to:
Determine Your Income
Take into account all sources of income after you have paid taxes.
Full- time Positions
Alimony, Spousal Support, Child Support, etc.
Track Your Spending Habits
These can be small things which have become habitual over the years.
Takeout on Wednesday's
Happy Hour| Ladies' Nights
Movie Passes + Subscription Boxes, etc.
Step no.2: Settle On A Savings Goal
By now you should have determined your real goal/ target by doing the exercises in Vibe the Vision. If you haven't read it yet, I highly recommend you do so. It will save you so much time in the future. With your true goal in mind, we can apply the practical steps needed to meet them.
You will want to begin with the long term vision in mind. Then, assign a dollar amount to it. This should be a well researched amount. I'm talking dollars and cents if you can find the appropriate information.
Once you've determined your financial goals, it's time to map the course. This is done by setting a target date of completion. Then segmenting your goal into achievable milestones, each with their own time frame. The map is not the territory. Things come up, people let you down, accidents happen, so allow for them in the planning stages. Whether it be in an emergency fund, or extra time, make sure your plan is realistic.
Step no.3 Get Clear On Your Expenses
In step 3 you want to make sure you know where, when and to whom your money is obligated. Do yourself a favor and note how you will make the payments as well?
An example of a "how"could be as varied as online payments or a debt payoff commitment in installments. Expenses are usually tallied with monthly expenses in mind. However, add ALL expenses even the ones with irregular payment schedules. For example, your car registration/insurance and water bill.
The fastest way to do this is with a brain dump. Then go back and categorize your commitments as follows:
General Category- Home, Transportation, Family, Recreational activities, etc.
Obligation|Company| Debtor- This is a subcategory of the first. Groceries would be an obligation. A debtor can easily be a person.
Time- Include payment schedule and dates.
Method of Payment- How will pay and where the transaction will take place? Example: Credit card ending in wxyz in an online payment portal)
Contact Information- This may seem a bit OCD in the truest sense, but I have everyone's contact information. Just in case.
Step no. 4: Refine Your Budget
If you were paying attention, I included debt in the expenses section. In my opinion, debt is an expense because it can come back to haunt you. If you can pay off your debt on a regular schedule, it will reflect positively on your credit score. Which you most likely will need to maintain the long term goal.
With that said, this step is about giving your neatly categorized budget a once over. Specifically, looking for ways to refine it to meet the scheduling breakdown you created in Step no. 2 Settle on a Savings Goal.
You do this by determining what is essential and what is not. This prevents you from the impulse to cut your budget drastically only to later regret your decision. At this point, you'll have a realistic picture of what you can realistically afford to set aside. If you're ambitious, when you are clear on the facts, you can begin to brainstorm ways to supplement your income or give yourself more time.
Step no. 5: Track Your Expenses
Finally, you will want some accountability to keep you focused on the long-term goal. There are many ways to do this. You can use your checkbook ledger, a spreadsheet, printable inserts, or a budgeting app. Just pick the one you're most comfortable with, master it, then use it regularly.
That's it, I told you it was simple! If you have a hard time letting something go remember where you're headed. If you've done everything correctly the vision associated with the vibe should be able to buy it (what your griping about) multiple times over- painlessly.
If you liked this do me a favor and share it please. I'm going to review the best Budgeting Apps next, be sure to follow me on Pinterest and Instagram for notifications.
Where's Your Happy Place? || Follow Me on Social Media
Instagram- Post notifications in real-time + inspirational quotes
Pinterest- SD | Daily board. All of Selene's Digest posts in one place.
Twitter- Most people personally follow me here.
Facebook- Like the page, follow, and message me.
✨Do you have an interesting idea? Contact me and have it featured on the blog.
Step 1. Review the Guest Post page and click contact.
Step 2. Then I'll message you the steps to get started.
..psst don't forget to leave a comment.