Creating a Budget

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"Money, money, money ain't it funny in a rich mans world!" - ABBA

Here is a simple way that my husband and I budget our expenses each month in order to pay off all our debts and save money for the future!

#1- Find a system

Make sure to sit down and create a way that you will be able to understand and see your budget everywhere you go. This can be in a notebook, electronically, or even through a notification system from your bank account.

#2- Categorize your money

Find out how much debt you have in total, how much money you have coming in total each month, how much you spend on bills, groceries, or other expenditures, and how much you wish to save or give to charity or other investments.

#3- Self check

For one month make a list or note to track every dollar earned and spent weather this is done through an electronic banking system, or a manual check register is up to you. Self checking allows you to see where your money is really going each month so you can later decide where to cut your expenditures.

#4- Crunch the Numbers

Now that you have self checked your spending from the previous month you can now see where to categorize your money. Our family makes our budget accordingly to give you an idea:

(Example of Budget)

Income $4,050 month

Bills:

1st- rent $1,000

- insurance $100

- car payment $350

- Utilities $150

15th- Phone bill $150

- retirement savings $180

- donations $180

- Other small bills (Netflix, amazon, etc) $50

Debt:

Car $15,000

Credit Card $1,060

Student loan $1,500

After writing everything out we can see that after paying the bills there is $1,890 left each month or about $945 for each half of the month. We then estimate that it costs about $100 a month on groceries per person of the household which would then leave us with $1,690 since there are 2 people in my home (me and my hubby.)

#5 Savings & Debt

Now that we have established that there are in fact sufficient funds left over then it is advised to tuck money away for savings and pay off any outstanding debts. In our family budget we chose to save 20% of the money we earn each month, but this number depends mostly on your personal preference and how much you really want to save. Going off of our original number of $4,050 we should be able to tuck away about $800 each month into savings. The way we split this up is in 2 different separate accounts (you can have how ever many you need but we prefer 2 for now) the first account is our emergency fund which will get $400 and then our regular savings for future activities, vacations, fun spending ect. which will get the other $400.

Now after all this we are left with approximately $880

#6 The rest of the money

Now you are left with almost $900 in your account after paying bills and setting aside savings, and even purchasing your groceries....what do you do with the rest? Well, if your family enjoys eating out every once in a while then I would suggest tucking a little of that money left over for date night or eating out. So, lets say we set aside $200 for eating out and date nights for the month the key is to STICK TO THIS AMOUNT! Plan those times you don't want to cook or you want to go have a date night and decide what amount fits your personal budget and stick with it no matter what!

The remainder of the money left over or the other $700 I would put toward any debt you may have and the best known way I have found to pay them off quicker is by using the "snowball effect" from Dave Ramsey. Check out my other post Debt Management to read more about this method.

By putting that money towards paying off your debt then eventually when your debts are gone then you will have more money to play with, invest, or save for whatever needs you want.

#7 Revise and Edit

The final budget tip I can give you today is to revise your budget each month so you always know what is coming in or out, if there have been any changes to your debts, income, or bills, and to make sure the method is easy enough to stick to or if you need to tweak something for the future.

I hope this helps! If you want more information on paying off debts stay tuned for future budget and money blogs! Thanks and have a great week.