My friends will most likely agree, I've never been great with money. In fact, it's one of a few things in life whose concept has escaped me. My hope is that by writing this article, I'll be able to help myself and any readers who may be struggling with this as well.
Budget: An estimate of income and expenditure for a set period of time.
Budgeting, to me, is an easy enough concept to grasp; write down your monthly income vs your expenditure and don't spend more than you have. Simple, right? In all honesty it is, you've just got to have the motivation and discipline for it.
In order to start a budget, you'll need a few things:
First you'll need your numbers. We're talking about your monthly net income and your outgoing spending - rent/mortgage, utilities, cable/internet, groceries, etc. If you don't have a solid number for something, ballpark it - just remember to ballpark a little higher than you would expect, that way you can compensate if need be.
Secondly, you need a way to track all this information. I prefer an Excel spreadsheet. There are many various templates you can find that are specifically built for budgeting, or if you like you can create one that better suits you.
Some of the budget templates available in Excel
The last thing you'll need is the desire and motivation to stick to your budget. This is something I've been lacking so far, but hope to change that starting now.
Once you have at least the first two things, but preferably all three, you're ready to start planning your budget. I just learned a method that I think is the most straight-forward way of doing this.
First, you're going to input your monthly income. This is usually a static number, but there are always things that could come up - lack of hours, pay cuts, positive things like bonuses and extra income, etc.
Secondly, you'll write down your monthly expenditures. These also usually do not change, as they are going to be your monthly bills; rent, utilities, cable/internet, any monthly subscriptions, etc.
Once these numbers are in your sheet, you'll know just how much static income vs expense you're looking at. From here, you can start budgeting things like groceries and other variables into your plan. Remember to factor in some savings! The goal is not to spend all your money, but to spend enough to survive and save!
Eventually, you'll want your budget to look something like this:
After you've got everything all set up and on paper, the only thing you have left to do is follow the budget you've just created. This is the hard part. It takes a lot of discipline to stick to the guidelines you've just set for yourself. Don't lose faith though, you'll thank yourself after a while. You'll see your savings grow each month, and you'll start to feel more confident about your financial situation and yourself.
Keep in mind, this is only my opinion on budgeting and by no means am I an authority on the subject. If you have any tricks or secrets you feel like sharing, please feel free to leave them in the comment section below!
One thing people forget to budget for is entertainment. It's the biggest stumbling block because if you don't have money in your budget to go out to dinner, movies, drinks, whatever, you will likely not stick to your budget.
ReplyDeleteGood job, sir!