Setting up a budget can be difficult. I know, I’ve been there. I learned several years ago though, in my life, it is a necessity. I have never been flush with cash and I’ve almost always had to nickel and dime my way through financial situations. We live paycheck to paycheck, this has always drove me crazy, but with a budget we’ve been able to work toward things that we may not have otherwise been able to, at certain points in our lives. If you can get a grasp on where your money is headed then there is always the opportunity to make a difference in your financial future. I hope to get there some day, but until then (and possibly after) I will work the budget like a pro.
Before you start your budget:
Before you can come up with a budget you will need at 3 months worth of how you have spent your money. Spend logs are an amazing way to do this. I have information on spend logs here.
Making your budget:
If you have used my spend logs you can skip this little section, because you have basically already done this, unless you’d like to weed it out a little bit more. Once you have an idea of how you spend your money you need to make 2 lists. One is for things that you consider necessary, the other is for things that you could do without. You know yourself and your family better than anyone, so who am I to tell you what you do and don’t need, but I will tell you the things I have on my list: Bills, Groceries, Fuel(vehicle 1), Fuel(vehicle 2),Household, Pop, Energy Drinks, Tobacco(those last three are not things that we couldn’t live without, but we do use them, so I like to make a budget for them),Vehicles, Entertainment, Additional Needs, Wants, Unexpected Expenses, and Other.
Using this budget worksheet list everything on your necessary list in the “categories” column.
Take your totals from the last 3 months for each of your categories and put them into the months column.
You need to find the average for each of your categories. If your totals in each “month” column are roughly the same, take all 3 months total and divide it by 3 to get your average. But say you have 3 totally different numbers, that’s were you might have to think a little bit. If 2 are the roughly the same average just the 2 months, but if your totals are completely different, like say you spent $100, $200, and $25, you will need to figure out exactly how you spent each month to determine a good starting budget. You will need to look over what you spent your money on and determine what was an actual need and what you could of done without. Then you can determine your budget. You might have a category like “Vehicles”. This one in specific can be a pain. In Example: The first month your vehicle was acting funny so you got the oil changed. The second month it was still acting funny, so you took it in for a look over. Everything turned out to be ok and you just needed to change the spark plugs. The next month you picked up a few necessities like washer fluid and oil. The best way to make a budget for categories like this is to make a rollover budget. Start with something you can afford like say $50 a month. Then every month take the remainder and roll it into the next month. It really is a see as it goes method, but there really is no way to determine if you will need more or less with this type of category, your best option is just to try to stay ahead of any unexpected repairs you may need.
You might have something like a budget for all of the items you buy for your household. This can include things like toiletries, baby items, paper goods, etc. The best way to figure out a budget for this would be to make a list of household needs. My needs list is categorized by when I need to purchase items. I use a weekly, bi weekly, monthly and every 3 months format. I total each list and use it for my household budget.
Anything that isn’t on the needs list, that we do end up actually needing to buy, goes in my “Additional Needs” category. It’s always good to have a part of your budget, such as “Additional Needs” where you can fall back to if you need. “Wants”, “Other”, and “Unexpected Expenses” are all fall back budgets. “Wants” is pretty obvious, “Other” is for things like birthday party expenses, and “Unexpected Expenses” is for obviously, unexpected expenses. These have relatively low budget amounts, so as not to abuse them, and I don’t rollover wants or other(unless I have a birthday coming up). The extra money might end up in another budget category if we end up a little short somewhere. Unexpected Expenses though, I do roll over.
After you have figured your totals you should look each of them over.
Does each amount seem reasonable and doable?
Could you cut back in some areas?
Try to be as reasonable as possible in each area. Budgeting is learned over a period of time. Give yourself some leeway. If you normally spend $500 or $600 on groceries in a month, don’t try to cut it half. You will set yourself up for failure. Start out small, like if you spend $200 on fuel every month, and you know it’s because you drive an extra unnecessary 30 miles a week, try budgeting only $150 and eliminating the unnecessary mileage.
Write your amounts into the budget section of your worksheets.
Now you have made your budget. Try it out, see how it works for you. You may find that you need to do some tweaking, but that’s ok.
If you have any questions feel free to contact me via my contact page located here. Or leave a comment in the comments section. If you found this post useful go ahead and share it social media or hit the like button.Thanks for reading.
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