A Step-By-Step Guide On How To Set Up A Budget
This post is all about how to set up a budget. Knowing these life-changing budgeting tips can help change your finances for the better.
Getting your finances in order and learning all you can about budgeting is extremely exciting. If you are anything like me, (new to budgeting), you are probably doing all the research you can to make sure you can set up your first budget. As a new budgeter myself, I am giving you the top tips on how to set up a budget that are super practical and I swear by.
You are going to learn about all how to set up a budget, how to make a monthly budget, and how to set up a budget on paper and more…
I don’t know about you, but when I first started budgeting, I was so overwhelmed and didn’t know where to start, ( so I didn’t do anything). As a result, I would just procrastinate, ignore my debt and figure it out later. The minute something felt hard or didn’t go right the first time, I’d just throw in the towel and say forget it!
But, the problem, though, is that your perfectionism and your procrastination is what’s stopping you from ever setting up your budget and giving it a go.
The reality is that mastering your budget will take effort and time. Sometimes you’ll stick to it and see huge progress on your finances. But, other times you’ll blow up your budget so bad that you’re embarrassed and want to hide form it.
Remember, the big things that you want to accomplish in life will NEVER happen instantly. You just have to stay committed and be willing to take those small steps consistently to get to your ultimate goal: debt freedom.
And it all starts with setting up your budget today (which will help you tackle your debt and any savings goals you have).
This post is all about how to set up a budget correctly so that you can stick to your budget insanely well and improve your finances overtime.
How to Set Up a Budget (Step 1:)
1.Here’s how to set up a budget plan.
I’m no expert at budgeting, but all I’ve learned a few tips from The Budget Mom on Instagram. (And no, I’m not getting paid to endorse her at all).
I’m genuinely grateful for her budgeting methods. Thanks to her, AND her amazing budget by paycheck workbook, I have been able to pay over $35,000 in the last 16 months. (I know I couldn’t have made huge progress on my financial goals without her daily encouragement on Instagram).
Let’s start with how to set up a budget plan.
These are the things you will need to set up a budget:
- Pen and Paper
- Bank Statements
- Your income
- All your bills for the month.
- A Blank Month Calendar.
If you are unsure about what bills you pay each month, go on you bank account online and look at your past statement. Write on a piece of paper all the bills you pay each month. Also, list down your paychecks, the amount and how often you get paid.
These are all your fixed expenses. (Bills that stayed the same every month). Once you’ve list all your monthly bills and income, you are ready for step 2.
How to Set Up A Budget (Step 2:)
2. Best ways on how to set up a monthly budget.
Next, list your variable expenses, the ones that change month to month. You can include:
- Gas
- Groceries
- Eating Out
- Savings
- Beauty
- Amazon
- Clothing
- Entertainment
- Health Products
- Gifts
- Unexpected
Your variable expenses will change month to month, that’s why you need to budget each month. Let’s say you have an anniversary gift, you need to set money aside for that event that month. But the following month you may not spend any money on gifts.
In other words, adjust your variable expenses according to the events coming up that month. If you are unsure about what variable expenses you may have every month, look at your bank statements for the last 3 months and come up with your own variable categories.
How to Set Up A Budget (Step 3:)
3. Here’s how to set up a budget on paper.
The absolute best thing for creating a budget on paper, is that it helps you get organized and eliminate any financial stress while allowing you to pay debt and save money.
When you start setting up your budget on paper, it feels more tangible, like you have more control of the numbers. (You’ll make progress a lot quicker: gain momentum, pay debt more aggressively and save more money.)
Now, let’s set up your budget on paper. First, list your income:
Just like the example above, grab a piece of paper and list your income (that’s the first step!) After that, you are ready for Step 2: (List all your bills that you will pay with that paycheck).
Remember, every time you get paid, you should do a new budget because your spending will change every time you get paid so will your money goals. You may want to make an extra debt payment with one paycheck and with the next paycheck, you might just want to save any leftover money.
Listing all your bills and making a plan with your money will help you get closer to your financial goals. Maybe you are saving for a house, or you just want to get out of debt, or build your fist emergency fund. Either way, you have to learn how to set up a budget, so you can achieve those money goals.
The point of budgeting is to spend less than you earn. So, focus on the leftover money, that’s the only money you can really use for your financial goals (whether is paying off debt, or saving).
Oh, and FYI, if you get stuck, or blow up your budget, don’t give up. Remember, it will take time to learn how to tweak and organize all your bills and stick to a budget. If you want more tips on how to stick to a budget, (go check out this blog post.)
More Money Tips on what to do with any leftover money:
Discover what your leftover money is. After you create your budget, you should have some leftover money. After that, decide what to do with the leftover money (before you get paid, so you won’t spend it on random things).
For example, if you just have $20 leftover (after you’ve paid all your bills), throw those $20 towards your #1 financial goal.
Is your #1 financial goal to get out of debt? Great! Then, throw that leftover money towards that financial goal. Now, you are one step closer to getting out of debt.
Again, don’t despise small beginnings. You can make a lot of financial progress in just a few months (even when you have very small amounts of money leftover from your budget).
This post was all about how to set up a budget so you can be as prepared as possible when dealing with your finances.
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