The word “Budget” is like the word “Diet”.  For a lot of people, the word instantly evokes a feeling of dread and the idea of being deprived of something you want.  But in fact, budgeting can mean just the opposite! By tracking your spending and making intentional financial choices, you might get just what you want!  

Budgeting does not have to be complicated, either.  A simple plan, looking at the money you have coming in and the expenses going out, is all it takes to create a budget.  Start with the amount of money you have coming in each month. Then add up your monthly expenses, and subtract that amount from your income.  Hopefully, there will be some leftover that can be put away for emergencies and occasional expenses, like car repairs, Christmas and property taxes.  If you have more expenses than income each month, then you’ll need to look at ways to bring in more income, or ways to cut your expenses.

Let’s start with the money you have coming in, and a calendar.  Do you get paid once a month, every other week, or weekly? Write the amount you receive on the calendar, on the days you get paid.  If you are paid on commission and your income fluctuates, this is a little trickier, but you can use averages to plan your budget.

Next, go through your monthly bills and write the amount due on the calendar, on the dates they are due.  Start with the bills that must be paid and don’t fluctuate much, like your rent/mortgage, utilities, phone, and car payment.  Then add in your other expenses, like child care, groceries, and gas for your car. For budgeting purposes, use an average amount, and put them on the calendar when you usually pay them.  If you go out to lunch once every week, or get a latte every morning, put those on the calendar, too! Try to be as complete as possible to get a clear picture of your spending habits. If you’re struggling to pay your bills every month, this may give you an idea of where your money is going, and where you can make changes.  You might be surprised to know how much your lattes are costing you every month! Don’t forget to add those “extra” expenses that don’t happen every month, like birthdays, property taxes, and renewing your car tags.

In addition to your regular monthly expenses, putting some money in a savings account is important.  We know that your car is going to need new tires at some point.  We know that the washing machine will need to be replaced someday.  We know that Christmas is coming on December 25th again this year.  These do not have to be emergencies.  We know they are coming, and we can plan for them!  You might also be surprised at how secure you feel, knowing you have some money put aside for when you need it the most!

If your expenses are greater than your income, stop using credit cards.  Paying cash makes you live within your means. Are there expenses you can live without for now?  Can you get rid of your cable subscription temporarily, or switch to a cheaper phone plan? Can you bring in more income?  How about a second job to pay off your student loan or credit card debt faster? These do not have to be permanent changes, but short term ways to get your finances under control.

Seeing your income and expenses in writing makes you aware of how much you’re actually making and spending.  With direct deposit, ACH payments, and paying for things just by waving your phone, it’s easy to lose track of your finances.   By making a budget, with intentional spending and saving, you’ll be more in control of your money, and that’s a good thing.

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