The easiest way to start a budget, period
My husband has an MBA and works in finance. He is always coming home with new million-line spreadsheets with crazy formulas for our personal budget and gets excited over the entire budgeting process.
I couldn’t be more opposite! I like things crisp and clean and am more of an old-soul, pen and paper kind of person! So below I have laid out how to create a budget for those of you who are like me and prefer the old school way of doing things.
The main idea that I had to remember when we would go over our budget in the beginning is that it doesn’t have to be complicated! It’s MY BUDGET! I can make it however I want! I can grab flowery construction paper to write on with colorful markers if I want to!
As far as what formatting and design you use, there is no wrong way to make a budget! After all the whole idea here is to be friends with your budget and visit it often! Why not make it look appealing to you!
This being said, there are some wrong ways to create a budget and cheat yourself from your own money, but we’ll get into that at a later time. The easiest way to start a budget is to remember this simple principle:
Income – Expense = 0
Yes, ZERO. This doesn’t mean you spend all your money each paycheck! It means you have a place for every dime you make so that you can account for everything that comes and goes. Honestly I’ve scratched my head many times wondering where my paychecks went before sticking to a budget.
Also expenses does not have to mean bills. Millionaires always say the most important rule is to “pay yourself first”. This means your expense should include your savings account, retirement account and any saving for big expenses or purchases coming up (like a new couch or Christmas).
Let’s go over a sample budget:
The easiest way to start and stick to a budget for a non-tech person is to get out a legal pad (a plain notepad will work) and a pen.
Start with Income: Paycheck 1 1000
Paycheck 2 1000
Expenses: Savings: 200
Fun Spending 200
Balance Check: Income 2000 – Expenses 2000 = 0 Check!
This example is as basic as it gets. You can estimate your bills like heating and air based on the month and what you paid previously. This is how big companies plan for their expenses too! It honestly gets easier every month and you may have to do some adjusting through the month based on what comes up.
But one HUGE TIP is to get out your calendar and see what is coming at you that month, holidays, birthdays, date nights, car maintenance, travel, really anything that will use money!
The main point of having any kind of budget is that you stick to it and are constantly referencing it. It’s like being on a diet, if you don’t follow it, it doesn’t work no matter what diet you are on! Having a budget written down is great, but it is your persistence and discipline that is the key factor in making your budget work for you!
With a solid money plan (budget) and the right attitude and follow through, you will see your money habits change quickly for the better and also feel like you have more money by just keeping track of it! The budget it a huge key for any kind of financial success!