How to Budget?

The end goal of a budget is to make sure you STAY ON TRACK.

The Secret:

There is not some magic sauce or secret. It’s simple: do not let the month rule you. Have a plan over your money each month! Set a goal and a timeframe for the goal to keep you motivated and focused!

Every month you need to think ahead. It took me a few months getting started and becoming comfortable with where I told the money to go. I have created numerous excel spreadsheets, which are great tools!

I like using Mint or EveryDollar app for beginning budgets as it’s easy and user friendly. You can purchase the “plus” version for EveryDollar which links to your bank account. Some may find this useful and at $99 a year, I can see why it’s a favorite by many users!

I use excel spreadsheets I customized. Mint is one of the best apps for being user friendly and automatically updating accounts you connect.

Is a budget necessary?

Well let me ask you some questions. How would you like to get in the car without knowing your destination? Let alone, you do not know how much gas is in your tank? You might as well be driving with a blindfold!

The idea behind a budget is knowing how much is coming in and how much is going out. Aka what is your income and what are your expenses.

Do you have a short fall? Do your expenses exceed your monthly income?

Budget’s are about you being organized. I personally want to see where every dollar and penny is going. At the end of the day it’s my hard earned money!

Setting up the budget is easy. The hardest part is sticking to the budget.

You will review your spending against your budget every month. At times when you say, I spent SO much on food this month. Changes might have to be made, and at times, drastic. Do you really want to live a life where you are broke and have more month at the end of your money?

Money problems can translate into real and drastic health consequences. Stress, let alone money stress, is a leading health issue we are facing in the world today. People are in piles of debt and have zero plan. Paying the minimums only helps the loan provider, not you. We are not meant to just pay bills and die.

The YOLO (you only live once) attitude is fun, until the bills come. That new shiny car, the watch, the phone etc. all are nice, except they own you. The “Payment” Generation is destroying our financial future.

The Emergency Fund:

Is this really necessary? Yes! We need to get ahead and the best way to get ahead is being ready for unanticipated expenses. You should focus on creating a 3-6 month emergency fund. Add up all your expenses in a month. Multiply that number by 3 to 6. This is the amount needed for your emergency fund! Life is real and it can hit us hard. An emergency fund helps when times get tough.

You need to get back in control. Control of your finances translates to control over your life. One of first things you need to do is control the outflow of how much you are spending per month. You need to track everything. Yes, this will take time at first, but is worth it.

The budget is essential to your financial future.

Questions to ask yourself:

  1. How much do I make after taxes?
  2. How much do I spend per month?
  3. Is there a shortfall? If so, how do I cover it (credit cards, borrowing, etc.)?  

Why I like the budget apps?

The EveryDollar app and Mint are an easy to use app on my phone which I can create budgets for each month and see if I am on track or have overspent. You enter your income, and all expenses, from housing and cable to groceries and any form of debt. Mint let’s you incorporate all bank and investment accounts along with your vehicle or house value. All this together gives you an live net worth summary.

You need to get your finances in order and realize where the money is going. We work hard for our money, so we deserve to keep it. The budget is an essential tool, no matter your age or income. When you are strict with your money and use a budget, we know where it goes. We should allocate money towards our goals, savings and investing.

The budget is a simple first step in your financial future. Your financial future is up to you and only you. What are you going to do about yours?

Until next time!