Are you one of those people who looks at your bank account a week after payday and thinks “Where did my paycheck go?” Would you like to to cut your spending? Do you want to save money for a vacation or big purchase? The easiest way to make more sense of your financial situation is with a very thorough budget.
When my husband and I got out of college, we moved to Chicago while I was working as a freelance stage manager and he was working on getting his EMT certification. This meant that we had to pay big city rent with drive-thru paychecks. Did I mention that we were also planning a wedding?? I created an Excel spreadsheet to track every penny that we spent, and we managed to get by. As our financial situation changed, so did my spreadsheet. I still track our spending very meticulously to make sure that we can afford to live the lifestyle that we want to live on the income that we have.
Think you are ready to give budgeting a try?
Click here to download a template of the budget spreadsheet that I use.
You can change it to meet your needs, but I’ve edited it to be a pretty good starting point.
Here are some important tips as you get started.
Set realistic spending goals
Start your month by adding values in for your “projected” income and expenses. Make sure to be realistic about what you expect to spend. This will get easier down the road as you learn what you actually spend on things. For your first month, just take guesses.
Choose your priorities
No matter how broke we were, my husband and I have always had something allocated in our budget for dining out. Going out for lunch or dinner is our prefered social activity, so we decided that it was an important thing to spend a little bit of money on. For a long time we didn’t prioritize having cable, so we kept that out of our budget.
Whatever it is for you, make those choices. If you want to spend a little more money in one category, then try to cut your budget somewhere else to make up for it.
Don’t forget your automated payments
So many things just come out of our bank accounts now – rent/mortgage, student loans, car payments, etc. Don’t forget to count these things in your budget or your numbers will be way off!
Make goals to pay off debt
Once you figure out how much money you need to spend to get by every month, figure out how much money you can afford to put towards paying off your debts. This mostly applies to things like credit card debt that don’t have repayment plans, but if you can afford to make more than just your monthly payments on loans, even better!
Think forward to tax time
Keep track of anything that you can use as a tax write off now – job expenses, charitable donations, childcare, whatever your situation calls for. When tax season comes you will be happy to just look back through your budget and find your deductions.
Have a system for entering things into your budget
I think that my system is pretty simple – when I spend money I keep the receipt or a post-it note with the amount spent in my wallet until I get home. When I get home I put the receipt in a clip on the fridge, and then once per week I enter all of our spending into my budget spreadsheet. Find whatever system works for you. Just make sure that you have a good way to keep track of your spending.
I hope that I have explained this process well enough that you can try budgeting. Honestly, I have been so careful about my budgeting for so long now that it has just become second nature.
If you have any questions, just comment below or send me an email from my about me page!