One of the MANY questions I get asked is…”How do I start a budget?!”
So go get a cup of coffee/tea (hey, whatever works!) and come back to join me on this extensive post all about the dreaded budget!
Now my top secret tip for beginners is to set up your budget and just do what you normally do for a month. Track your spending habits, your bills, your income. Gather it all neatly and simply watch what you are doing. this allows you to see where your money is going and what you can cut back on vs. what you cannot stop doing.
My second tip on budgeting is to start small! Don’t overwhelm yourself. All life changing habits do not occur over a month. This is trial and error and for the first few months you will not reach your goal, and that is okay! During the first month of tracking my spending, I spent (ugh can’t believe I am admitting this!) 545.82 on Mics. items. This was eating out, clothing, and anything that is not really needed. I set up a miscellaneous fund of $100 to have fun with for the month, HEY a girl has got to have a little fun..RIGHT?! but I was 445.82 over what I thought I could do. The next month I upped my allotment for the month to $200.00 and I was able to keep that goal.
Setting a Budget
How do I set up my budget? First, I break it down into categories based on my bills.
- School Loans
- Credit Cards
- Auto Loan
- Insurance (car)
Second, I calculate what is needed to make minimum payments on all necessities. Next, I allow myself that much money to pay them. I calculate how much money I will have left. I think of all the things I will need that month, a haircut, a birthday gift etc., I add this into my Mics. allotment. Take all income, savings, and debts and place them on a spread sheet, I use Exel for this.
Now, what do I do with the money I have saved that month? I take ALL of it ( I already have an emergency fund) and put it towards the debt with the highest interest rates. Right now happens to be my auto loan.
Personally, I do not use the snowball effect. Not that I think there is anything wrong with it, I just don’t believe its right for me.The best way for me to pay down my debt is to focus on how much interest will be paid over time and try to knock that down as low as possible.
I really hope this beginners budgeting plan has helped motivate you to start tracking your spending and to create your own budget. Please share your budgeting tips in the comments below!
and if you still need some motivation check out my Favorite Financial Quotes.
I love to hear from my readers so feel free to email me to Kelley.firstname.lastname@example.org