If you’re like most people who want to take control of your money and have started to try to figure it all out, you know you need to do some sort of budget. As scary as a budget may sound, it really isn’t that difficult (unless you make it that way). Let’s go over the basics. Before you get started, you’ll need:
- a blank notepad (or my budgeting forms)
- a pencil
- a calculator
- the latest copy of all your pay stubs and bills
- a monthly calculator
Once you’ve got these things, set aside some time and put away all distractions. Here’s the process:
- Write down your take-home pay from all the various ways you bring money into your home. If you’re using my worksheets, this would go on the Income Sources Worksheet.
- List out your bills, looking at those you pay every month and those you do not.
- For those you don’t pay every month, get the amount of that bill broken down into a monthly number that you should set aside. For example, if you have car insurance that is $300 every 6 months, you should plan to set aside $50 per month to cover that bill. If you’re using my worksheets, this would go on the Irregular Bills Worksheet.
- For those you do pay every month, be sure to capture the name of the bill, the minimum payment, the due date, and any special information (such as the interest rate or the overall balance owed). Don’t forget to include things like groceries, gas, entertainment, clothing, etc. If you’re using my worksheets, this goes on the Monthly Bills Worksheet.
Steps 1 and 2 above capture the income and expenses – the math – of your budget. Now you need to work on the more important part – the behavior.
Behavior and Budgets
On the monthly calendar (or the Cash Flow Calendar, if you’re using my worksheets), fill in the blanks from the steps above. Write in all the paychecks (on your pay days) and your bills (on your due dates). The other stuff like groceries or gas that need to go on there should be listed depending on when you plan to get groceries or fill up your tank. This calendar is your budget. You’ve planned out how to spend all your money on paper for the month and all you have left to do is carry it out. Each month, adjust for the ups and downs of your bills and make other minor tweaks until you have a good feel for the process.