Finance Friday #1 - Making a Budget
Thanks for stopping by to check out the first ever episode of Finance Friday. Each week I’ll be posting a brief video blog on a different finance topic. If you have a specific question you’d like me to cover in the future, send me a message!
No matter what level of income you are at, the best way to ensure that your money is going where you need it to. A solid budget (that you actually stick to) is the key to meeting your financial goals. Whether you want to retire early, take a long vacation, or pay off debt, tracking your spending is a necessity to meet any monetary objective.
Steps to creating a Budget:
Write down your income and expenses.
This part is simple math. Grab a sheet of paper and write down how much you make each month at the top. If you share the expenses with another person, include their income as well.
Below that line, jot down your general expenses such as housing and utilities.
Make specific spending categories.
Time to make your list a little more detailed. Move on from your general “outgoing spending” amount and list all of the ways you spend and all of the payments you make in a monthly period.
This will include every. single. thing. you spend money on. Be sure to not include housing and utilities, but also categories such as dining out, gas, insurance, shopping, Netflix, and so on.
Next to each category, write down how much you would like to be spending in that area, or what you estimate that you’re spending on average.
Find out how much you’re actually spending.
Print out all of your transactions from your debit or credit card for the past month. If you only spend in cash, this part may be much more difficult. I highly recommend that if you have trouble tracking, use a method in the future where you can see line by line where your money is going.
Looking at each transaction, assign it to a category from the list you just created (Publix into the grocery category, and so on). Here you may find that you do a lot of spending you didn’t initially think about, and may need to create more categories.
This step will help you assess if the amounts you decided you want to spend each month are reasonable, and will also help you see where you could be cutting back on spending.
Get a budgeting app.
In our family, we use the Mint budgeting app and the desktop version on Mint.com. This amazing and simple app is FREE (although there are some in-app purchases such as credit monitoring and a few others; our family has never chosen to do any of the paid portions and it works great).
Link your credit cards and bank accounts. It’s completely safe. The app will automatically track each time you spend, and will import the transactions into categories!Pay attention to your spending.
This part is simple. Open the app each day and check how much you have left in each category. This step is especially important if you tend to be an impulse buyer.
Ta-da! You now have a budget. I hope this was helpful to you! Please reach out to me here, by email, or on Instagram if you have questions or topics for future episodes. Thanks for reading/ watching!
