I never budgeted in my adult life before neither did I know how to create a budget!
Another money misunderstanding of mine was thinking that I can spend however much I received from my paycheck.
Because I didn’t categorize or track my spending, I didn’t know how much I needed nor how much was being spent each month.
Your ‘Why’ has to be bigger than your ‘But(t)’
This was one of the best things I’ve heard from a couple doing their Debt Free Scream on Dave Ramsey’s show!
We all have excuses on why we do what we do when it comes to our finances. I finally came to a strong realization that I no longer wanted to have student loan debt.
When this realization slaps you in the face, you then start to call yourself out on your own excuses.
First ask yourself: Why do you want to start budgeting? If you don’t have a strong enough reason, you’ll likely not be motivated enough to accomplish your goal because the journey itself is hard.
Look at what you’ve spent money on last month then categorize each expense.
Everyone’s categories will look different.
I don’t have a mortgage nor do I pay for housing (thanks to my dad, mom, and mother-in-law, each whom I’ve lived with at one point or another, I’ve been able to pay off debt even faster!). I also don’t have a savings category while I’m on Dave Ramsey’s Baby Step 2. Read about my plan to get out of debt here.
My budgeting categories:
Once you’ve categorized your expenses, add up your totals.
Subtract your monthly expenses from your monthly take home pay.
If you spend less than what you make, you’re on the right track!
If you spend more than you make, it’s time to readjust your budget in each category.
I didn’t make any headway until I cut out certain things from my monthly budget. Read how I cut out $317.98 from my monthly expenses here.
It’s easier for me to stick to things in small intervals because it’s less overwhelming. This is why the Zero-Based Budgeting method works best for me.
The 50/15/5 Guide and 50/30/20 Rule are just a few of many guidelines when coming up with a budget. Read about these below:
It took me a few months to fine tune and stick to my budget, but now that I’ve been on a roll for 2 years it’s like clockwork!
Create a smart goal for your finances. You can learn how to do that here.
Are you saving up for a vacation, a new car, or a down payment on a house? Keeping this goal in mind will motivate you to stick to your budget and squeeze out every penny you can.