Create A Budget The Easy Way

Do you want to create a budget the easy way? Then you have come to the right place. Budgeting is the most important component to Achieving Debt Freedom. Budgets help you tell your money what to do so that you don’t have to wonder where your money went. I had always thought that budgets were only for broke people. But as it turns out, budgets are for people that don’t want to be broke.

Create a Budget The Easy Way: 0 Based Budgeting

What is 0 based budgeting? It’s when your income – expenses = 0. This doesn’t mean that you don’t have any money in the bank at the end of the month. It means that you are telling every penny of your income what to do. Davey Ramsey also does this. He suggests keeping a little wiggle room of $100-300 in your budget as a buffer.

Create A Budget The Easy Way: List Your Bills & Income Streams

Start making a list of all of your bills and income sources. A great way to start is to print out your bank and credit card statements. Some banks give you the opportunity to set up and track spending categories. If this is the case for you, just print out your spending report for last month. If your bank doesn’t allow you to do this, it’s time to break out those highlighters. These sharpies are my favorite. https://www.amazon.com/SHARPIE-Pocket-Highlighters-Assorted-Highlighter/dp/B0040R4E2O/ref=sr_1_5?keywords=highlighters&qid=1676904419&sr=8-5.

Highlight all of the like-items or categories in the same color. For example, highlight all of the gas charges in yellow. You might highlight all of the food charges in blue. Make sure that you add in the things that you don’t pay every month like car or house insurance or property taxes. This could also include yearly subscriptions to streaming services or car washes. Also make sure to separate the groceries totals from the restaurant totals. Now total all of your categories for one month on to paper. Your categories might look something like this:

Income $6000.00

Expenses $6000.00

• Giving $600.00 (This should be 10% of your income)
• Savings $500.00 (This maybe different depending on the baby step you are in)
• Basic Necessities ( Dave Ramsey’s “The Four Walls”)
  • Groceries $500.00
  • Gas $150.00
  • Utilities $300.00
  • Rent $1000.00
• Other Expenses
  • Car payment $450.00
  • Loans $200.00
  • Daycare $150.00
  • Restaurant $100.00
  • Medical Insurance $450.00
  • Subscriptions & Cable $200.00
  • Extras $200.00 (This is Restaurants, Birthday Party, date night.)
  • Non-Monthly Expenses $100.00 (Expenses that don’t happen every month like house taxes.)
  • Debt Snowball $1100.00 (This money is allocated to pay off your debts. More on that later.)

Create A Budget The Easy Way: Analyse Your Spending Habits

Is there a certain spending category that took you by surprise like groceries or restaurants? If you don’t keep track of your spending and tell your money where to go with a budget, your hard-earned money will flow right through your hands like water through a colander.

Analyse each category and have a heart to heart with yourself. Do you honestly think that you need to spend that amount each month in that category, or do you need to adjust it to meet your goals. Your budget needs to be doable. For example, if you are trying to cut down on your grocery bill, set a goal to spend $50 less the next month and reduce father if successful. Before you spend money on something that is not a necessity, ask yourself, is this thing I’m about to buy going to help me reach my goal? If not you, you shouldn’t buy it.

Create A Budget The Easy Way: Align Your Budget To Your Goals

Before we make our budget, we need to think about our goals. What do you want your financial future to look like? Most likely you want financial independence. That means no longer being a slave to your debts. Your debts control everything you do. For example, you might want to change jobs, but you can’t afford to leave the one you have because the money is good, but you hate it. If were financially independent, you would have time to find the job that you love, and the money wouldn’t a factor or you wouldn’t have to work at all.

Before we get started, here are some helpful hints to Setting SMART Budget Goals to help you set a reach your financial goals the SMART way. Now take out a piece of paper and write down your financial goals. Go Big Or Go Home. What Do You Want For Your Future? Make two goal lists, long and short-term. Big or small, write them all down. The big ones will take more time than the small ones but with baby steps, you Will get there. Here is my story about Achieving Debt Freedom.

Create A Budget The Easy Way: Making Your Budget

Now that your goals are fresh in your mind, let’s get started on that budget. Take out a new piece of paper and write down your income and the categories that you listed when you wrote your expenses from your bank statement. Now for each category, decide on a realistic amount to spend. You will get better at this task as you do a new budget each month. If you would like to know Dave Ramsey’s recommended percentages for each spending category, you can find it here. https://www.ramseysolutions.com/budgeting/budget-percentages

How much were you able to shave off of your budget to put toward your emergency fund or paying off your debt? Were you surprised that you were able to find that much money from your budget? The more you find in your budget the harder you will look to find more ways to save money. When you make your budget each month, make sure that you have the list of goals that you made to remind you of what you are working towards.

At first, sacrificing those unnecessary things might feel painful, but keep your focus on your goals. After you have met the first or second goal, your savings muscle will become stronger, and you will be well on your way to financial freedom. To quote Dave Ramsey, “Live Like No Other So That You Can Live and Give Like No Other.” The journey is well worth it. I promise you.