“Budget” is a term that is often misunderstood, despite the fact that family budgets can become one of the most important financial tools in our lives.
When you ask a friend if you want to go out for food, and they say, “I can’t, I have a strict budget,” it makes you think badly about your budget.
This means that following your budget means you can’t do anything you want to do.
That’s the opposite of the budget!
A good, balanced budget is spending planning. Decide what you’ll spend your money on and follow the financial plan.
Do you have $200 left after your bill and want to go out for dinner? do!
That’s the ability to learn how to budget. You can decide exactly what your difficult earning money will do for you.
Learn the best budgeting tips and the best money quotes here.
What is your monthly budget?
Your monthly budget is your monthly plan for money. When you get money in every month, you get money.
In this way, you are taking your hands with all your finances, your income and your payments! It is the best way to achieve independent wealth and take care of yourself financially.
The budget shows exactly how much you are in and out and ensures you are living within your means.
Create a list of all the money you have incoming money, including weekly or biweekly pay and side hustle income.
After that, write down all the costs. This is where it gets interesting. For most people who don’t have a budget, the cost can surprise you by adding how much money comes from your account each month.
Budgeting allows you to see the flow of money and redirect the flow to better things, allowing you to work towards your goals.
Budget Method: 6 Easy Steps Everyone can follow
- I promise to stick to my monthly budget
- Write down your monthly take-home income
- Pay yourself first
- Write down the costs for that month
- Calculations, reviews, adjustments
- Rinse and repeat every month
So let’s go a little deeper into each of these steps.
1) Promising to stick to your monthly budget
You will need to create a new budget every month. Yes, every month – because each month is different. You can earn an additional salary for one month. There will be more payments in the next month.
The budget is fun. Because you can see the progress you are moving towards your goals.
At the end of each month, sit down and make a new budget. Of course, you can use most of the information from the previous month, but depending on what you plan, it may vary from month to month.
Remember – a budget is a tool that will help you achieve your goals and is to stop you from wasting your hard-earned money on things you don’t really want or even need.
2) Write down your monthly take-home income
Look at the bank’s statement and see the exact amounts that come every month. You probably have money to come in for something like
- My husband’s income
- Wife’s income
- Side Hustle Income
Make sure you put the exact money that comes in your account. However, if you’re not 100% sure, it’s worth checking out the bank.
If you’re not sure if you’ll receive a certain amount of money, I recommend you remove it from your budget just in case you don’t get it. Only budgets with guaranteed money.
3) Pay yourself first
What many of us tend to do is pay our bills, spend money on what we’re taking our fantasies, then try to save the money left afterwards.
This is one of the biggest budgeting challenges that people get stuck in. Once you receive the payment, make sure you pay yourself first.
What this means is to think about saving like an invoice that can’t save money and move straight to saving money before you start using it.
4) Write down the costs for the month
You can look at your bank account and see what you need to pay for that month.
- Mortgage/Rent
- Gas/electricity
- water
- sewage
- garbage
- Home insurance
- Medicine
- Grocery
There are other things you pay, so it’s best to check your bank statement and look at the previous month.
When it comes to variable costs, you can look back at previous bank statements and see how much they have spent over the past few months.
This is an important step. If you have something you want to store, you will need to compare it with what you spent before or get a quote. If you want to go camping but stay on budget or have a fun stay with your family, you need to take into account your savings in advance.
In categories like groceries and eating out, we can speculate that this is very wrong in terms of how much money is spent. So tracking these costs can help you make a realistic budget.
Calendars can help you solve what you need to pay for in a month or several months, such as birthdays and various occasions.
You’ll want to get as low a cost as possible so that you have more money left for the important ones.
5) Calculations, reviews, adjustments
Once you have the total income and expenses, you can subtract the expenses from your income to see how much you have left.
Your invoices must be paid monthly – these are non-negotiable. Once you’re sure your bill will be paid, you can check the remaining amount and move that money into different pots.
The pots we’ve been discussing are things like sinking funds (for birthdays, Christmas), savings, fun money, emergency funds, and more.
You can change your mind and adjust what you were thinking of doing first. It’s down 100% to you. Make sure you are realistic and ready to show up.
6) Rinse and repeat every month
The budget is not a one-trick pony. You need to keep it and make sure to change it and check it every month.
The more you look at your budget, the more it can sink and you’ll be on your money. If you are working towards your goals, this will help you stay on track and motivated.
Does your monthly budget really work for me?
Monthly budgets definitely work, but we need to remember that we are human, not calculators.
What this means is that it’s easy to manipulate numbers and work for you, and provide a lot of extra cash each month, but if you’re changing your lifelong habits, you need to give it a little slacking and be realistic.
Normally, if you spend $1,000 a month on food, it’s very unrealistic to put in the budget of spending only $100 next month.
An easy way to see how much you are spending on variable costs (and therefore costs that change to costs per month) is to go through bank statements from the past few months and add how much you are spending on those specific things.
Success in a budget depends on creating something realistic and sticking to it. If your gas is down $200 that month, don’t exceed that amount. If you think you’ll look into it, then overbudget it.
The budget you create is personal to you, so you can decide exactly how much you want to spend on things and give money to that daily Starbucks treatment.
Why is monthly budgeting so important?
I am a large advocate for budgeting. Because we all believe that we should have what we are aiming for. And as much as we want to tell ourselves that money isn’t important, it helps us pay for the many things we want!
We’re not talking about wardrobes that jealously jealous of Kardashians, it’s like an eternal home for your family. Perhaps your career will change to a job that will bring you so much happiness compared to the dead-end job you are stuck in right now, as you will have to pay the bill.
Personally, I use budgeting to struggle financially, manage my money and pay off my debts, and save what’s important to me. Now I use it to pay bills to save on my home and down payment.
If you don’t track and control your money, that’s where the hole opens.
Don’t know where your money goes every month? It could be that you’re doing random things like clothes or night, and they won’t help you achieve your big goals.
This is of course not the same for everyone, and some people manage well without a budget, but it certainly helps the majority of you make money where you want.
What type of budget do you have?
There are several different budgets out there, but there tends to be the most popular (for good reason) zero-sum budget and the 50/20/30 rule budget.
A zero-based budget will remain totally $0 by allocating all the money to different things.
As mentioned before, if you leave money “just in mind” in your account, it’s very easy to spend that money on something we really didn’t want.
A zero-based budget will help you find a place for your money and if you want to spend $100 a night in that month with your savings, money to do whatever you want, so that all your bills are covered.
The 50/20/30 budget is where you divide your spending into percentages (50%, 20%, 30%).
The 50/20/30 rule basically helps you categorize and prioritize where your money goes.
50% is a fixed required cost. This does not change monthly, including mortgages/rents, insurance, etc.
20% is for your savings or other financial goals you are aiming for.
30% is for variable costs you have each month, so it changes from month to month. Examples include groceries, gas, fun money.
The beauty of the 50/20/30 budget is that when you pay for essential things (like a home) and very important savings (20%), you need to leave the remaining 30%.
This means that you need to be aware of what you are spending on items that have no variables and make them think about what you are spending on “back” money.
Why is it difficult to stick to a budget?
If that’s something you’re new to, it’s hard to stick to your budget. As mentioned at the beginning of this article, budgets can cast negative emotions and may feel like they are previously limited to being able to spend money freely on what you want.
If you’re completely honest with yourself, you probably already know the area you’re spending too much, but you may not know how to tackle that issue.
This is where your budget helps you! There are things that can help you stay hand in hand with budgeting, such as planning meals, not spending days, and tracking expenses.
If you throw a curveball, that would be difficult. This always happens even if you plan, but you can still prepare for them. When you have a budget, you need to start putting your savings in different pots.
Popular examples in the world of personal finance are emergency funds and sinking funds.
To be clear, emergency funds are due to emergencies like your car explodes or a washing machine. Some people may not consider them as emergency, but if you get to work or need to wash your child’s clothes, you will!
This means that emergency funds should be added to some trainers for children, not for use if they are over-snuggling food. It’s not to buy Christmas presents or Halloween costumes, but we’ll cover them with sinking funds.
Unfortunately, emergency situations occur and they always seem to come at very inconvenient times!
Putting some money down for the emergencies that come up will help you keep your budgeting going smoothly.
Funds sinking – This is another way to save money, but not an emergency. Instead, for Christmas, Thanksgiving, Halloween, birthdays, weddings, school trips, etc., you know what you have to pay.
You can work on funds that sink into your expenses, and this is useful because you can save all year round, as you can save all year round, rather than taking a hit with one big amount of money close to time.
These tips can handle the curveballs that life throws at you, making it easier to stick to your budget.
How to budget when you’re bad with money?
I don’t think that money is terrible. For example, when it comes to managing it, you may not know where to start when it comes to understanding the best financial decisions for you and your money.
Positive behavior comes from positive thoughts. If you think you’re terrible with money, you’re probably going to be.
If you think to yourself, “I may not have done well with money in the past, but I’m going to work on how to learn how to manage my money better,” this has a much stronger effect on your financial perspective.
We all need a goal. I need it why.
Why do I need to save money every month when the chick calls my name?
Why do I need to budget when I want to buy new clothes every other day?
Why do I need to make extra money on weekends where I can hang out with my friends?
Those things probably sound fascinating, and they do. We’re not saying you can’t do those things, not only do they need to be on budget, but also to be realistic about how often you want to do those things.
But I’ll go back to why. Today there are millions of different temptations trying to take our money, so there is a need for a reason to stick to this.
A budget can help guide your money to what you personally think is important. Want to travel the world with your partner? Add it to your list and find a way to travel cheaply to stick to your budget!
Want to set up your business so you can become a home parent like Kellan? Find out which low-cost businesses you can start and make a profit!
These are amazing, yet achievable examples of goals and dreams.
You deserve to work hard for that money and be able to do what you really, really want to do.
It’s all about finding the best way to work for you. Some people find it best to use cash alone, while others feel that they can only use their cards. The beauty of personal funding is that it is completely personal to you.
Monthly budgeting tools
When you start budgeting, it can be a bit confusing, what to write down and where to start.
If that helps you, using good old pen and paper is also some other great options available to you. It’s about finding the best one for you.
1. Budget template
There’s a great budget template out there that can help you manage your money.
Most of them should include home, food, insurance and car basics. It breaks further under each to help you allocate money to categories.
Budget templates are a good option if you want something simple, or you can print and stick to the fridge.
2. Budget planner or binder
If you’re a pen and paper type person than getting a budgeting planner that works for you, it’s a must.
Budget planners and binders are great as they have so many different options to choose from.
You can find a planner that works specifically for you and your family to need.
3. Spreadsheet
Are you a fan of Excel? you can Create your own budget spreadsheetand set them exactly.
Use them to calculate how much you have extra money. Use the formula to help you solve things when you need to adjust your budget. It’s your own budget calculator.
4. mint
mint It’s a great place to manage your money as you can link all your bank accounts, credit cards and retirement accounts. This can provide an overview of your money. This will help you better manage it.
You can use it freely. Having all the financial information, Mint can look at the money you have and make recommendations based on what you think you can save.
5. Empower (formerly personal capital)
I recommend a combination of empower and mint. This will provide a good picture of your money situation, so we recommend managing your finances.
Gives strength It’s a place where you can digitally track your finances and you can also sign up.
They have financial tools that show how well you are doing and whether you will be fine in the future. This is very useful as it saves you from having to do all the calculations yourself!
6. everydollar
EveryDollar is a budget app created by Dave Ramsey and can also be downloaded for free.
It helps you to formulate your budget by asking you to spend your income, your expenses, and helps you to track your money throughout your month to keep up with it all.
Bonus: Additional budgeting tips and tricks
Living frugal can cost very low and can also help you assess what is important to spend your money. You may have thought you need to buy coffee every day, but you will not miss it and find that you can cut it out of your budget.
It will make you think about what you want to do with your money, how to better manage it and avoid temptation. Basically, it helps to avoid stupid money mistakes.