Hey you guys! There was once upon a time that we discussed how to start a budget here on this lil blog. It was actually one of the first series' we ever did, and the content stays true, but we've decided that we should revive those ideas and do a new post on basic budgeting with free worksheets to help you get moving if you've never budgeted before! I also added two of my favorite Dave Ramsey quotes on the bottom of them for a little extra motivation.
It can be overwhelming just getting started, so we've broken down "how to start a budget" into three steps.
Step 1: Make a financial plan that is right for you.Here isthe whole post on step 1.
An ideal family or personal plan should have short term (1-2 years), mid term (5-10 years) and long term (20+ years) goals. Short-term goals should be the most specific.Keep in mind that there are multiple ways to achieve a goal, and everyone’s goals will be different. That’s okay. This is why it is helpful to establish a general financial plan first and then break that down into more defined steps that will help you attain your broader goals. (By the way, do you know about SMART goals?)
Print your free financial plan worksheet right here.
Step 2: Make your basic budget workup. Here isthe whole post on step 2.
Take your gross monthly income and then subtract from it all your mandatory expenses. This is the point where you decide how much you want to save each month. If you have debt you should have a plan to pay it off and this might be a higher priority than saving, at first. Whether it is or not, paying off debt should be a high priority in your monthly budget. After your mandatory expenses have been taken out and you have set aside the amount you want to save, you can subtract your voluntary expenses like cable and cell/data plans. Then, take whatever money is leftand divide it between your remaining expenses (gas, food, etc.) If you are lucky enough to have a balance after all that, it's extra “fun money” and can be divided however you see fit into categories like eating out, home decor fund, weekends away or whatever your jam is!
Print your basic budget worksheet right here.
Step 3: Track your spending.Here is the whole post on step 3.
Listen closely.You are not budgeting unless you are tracking your spending.Steps 1 and 2 are worthless if you just write that all down, stick it in a drawer and do as you've always done with your money. Not only is this the most crucial step when it comes to your budget, it can also be the hardest. It is hard because it will open your eyes to how much you waste. It is hard because it will force you to cut back. It is hard because it can be time consuming. There are so many different ways you can do this. Both of us love YNAB (a budgeting software)as it is so easy to use and they have a sweet mobile app for tracking spending, which adds convenience to the mix as well. There is also the always free Mint.com, software like Quicken, Dave Ramsey's cash envelope method (see: Total Money Makeover) and tracking by hand. Try out a few different things and see what you like the best.
We love budgeting so much that we started a whole blog that focuses on how we are happyliving life this way. Budget is not a four letter word.It's a passion! If you do this you will find that you are much less stressed out by money, paying bills, etc. and you will not feel buyers remorse after a trip to the store because that money you spent was set aside for you to spend! Saving is a thrill when you know that each penny saved is a penny that can go toward a bigger dream you have. Whatever you do, come up with a budget that will work for you. It's personal, so everyone's will be different.
If you're looking for ways to cut your expenses down in certain categories, here are ten super easy ways to stretch the budget, and please explore ourblog as we have tons of other ideas for you, in the form of easy and inexpensive recipes, or crafts and DIY's to help create a beautiful home on ANY budget!
NerdWallet recommends the 50/30/20 budget, which suggests that 50% of your income goes toward needs, 30% toward wants and 20% toward savings and debt repayment. Monitor your credit, track your spending and see all of your finances together in a single place.
Google Sheets' native free monthly budget template is a user-friendly income and expense tracker. It allows you to plan and track your expenses every month, ensuring you stay on top of your financial goals.
The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
The Goodbudget app is available for both iOS (4.6 stars) and Android (4.1 stars). Goodbudget also offers Budget Bootcamp courses to teach users how and why to create a budget that works for them how to stop living paycheck to paycheck, how to get rid of debt and a crash course to help tackle financial emergencies.
1. The zero-based budget. The concept of a zero-based budgeting method is simple: Income minus expenses equals zero. This budgeting method is best for people who have a set income each month or can reasonably estimate their monthly income.
Wally took a spot on our list for giving users the opportunity to create a free budget and have access to progress trackers as they work toward hitting their financial goals. Users can also sync their accounts with other members of their households to give everyone an overview of their spending habits and goals.
Try the 50/30/20 rule as a simple budgeting framework. Allow up to 50% of your income for needs, including debt minimums. Leave 30% of your income for wants. Commit 20% of your income to savings and debt repayment beyond minimums.
Google Sheets has a few free budget template options for budgeting, such as an annual budget template, a monthly budget template, and an expense report.
Your budgeting spreadsheet should include categories for each of your income sources, along with categories for each type of expense you need to track. Add up your income and expenses separately, and then subtract expenses from income to get the difference. You'll also want to create a category for savings.
A budgeting pie chart is an easy way to see your finances visually. It can help you to better understand where your money is going each month and allow you to adjust as needed to improve your spending habits.
Are you approaching 30? How much money do you have saved? According to CNN Money, someone between the ages of 25 and 30, who makes around $40,000 a year, should have at least $4,000 saved.
In his free webinar last week, Market Briefs CEO Jaspreet Singh alerted me to a variation: the popular 75-15-10 rule. Singh called it leading your money. This iteration calls for you to put 75% of after-tax income to daily expenses, 15% to investing and 10% to savings.
The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).
Consider using a money-tracking app, budgeting software or even a simple spreadsheet. The idea is to spend only what's in your bank account. If you budget $100 a week for groceries, for instance, don't hesitate to put things back to avoid going over.
In the 50/20/30 budget, 50% of your net income should go to your needs, 20% should go to savings, and 30% should go to your wants. If you've read the Essentials of Budgeting, you're already familiar with the idea of wants and needs. This budget recommends a specific balance for your spending on wants and needs.
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