Why should I start a budget?
Do you sometimes feel like your money owns you, even though you’ve worked to own the money? Or do you ever feel like you’re a slave to bills, payments, rent, and loans? Do you wish that you could be in charge of your money?
The thing I love most about budgeting is that it puts ME in charge.
I make the decisions. I am the boss, and money is my tool to make a better life.
YOU can start your budget TODAY and have peace of mind in the years to come. Here are 8 steps to starting a budget:
1) Set Goals.
Budgeting should start with a good goal, otherwise you’ll never have the motivation to begin a budget in the first place or stick with it for more than a week.
Your budget is supposed to last a lifetime, so think big with your goals!
You might set goals to get out of debt, buy a new car, build a dream house, take a fancy vacation, pay for your kid’s college, start a business, flip houses, buy a boat, invest in the stock market, the list goes on! There are so many neat things you can do with the tool of money, just as long as you are intentionally setting goals and working towards them.
Once you’ve got your goal in mind, it’s helpful (and more exciting) to imagine how you’ll feel when you reach that goal. Picture yourself making your last student loan payment – aaah, doesn’t that feel nice? Imagine driving away from the car dealership with a car that doesn’t break down and has that nice moon window you always dreamed of – oooh it’s nice.
Keep pictures of your goals somewhere you can see them each day to motivate you further. Maybe you’ll start a pinterest board of your dream home or print out a picture of the Bahamas.
Setting a goal is the most exciting – and perhaps most important – part of setting up a budget.
Choose Tools.
The smart way to start a budget is to use tools that make it easier on you. This increases the likelihood that you won’t give up on a budget because it’s too complicated.
Figure out what tools you’ll use to track your progress.
- You might use an app to track your budgeting goals (some of the best apps I’ve seen are Mint, YNAB, and GoodBudget, which all have different pros and cons).
- You could research the cash envelope system of budgeting, where you pull out physical cash from the bank in the amounts you have to spend each month.
- Another idea is to set up your own budget in a google sheets program (this is my preferred method, which takes a lot of initial work and set up but gives me complete control over formatting and style)
Take a look at the various budgeting options in order to make the best decision for you.
Track your income & expenses.
First, you’ll want to figure out how much money you are making by looking at past paychecks. Once you have an estimate of how much you make each month, start dividing those paychecks into the categories you’d like to spend them in.
You might have categories for your goal, rent, groceries, gas, fast food, phone bill, utilities, clothes, medical, charity, savings, gifts, other, etc. Then, begin implementing your goals.
You might realize that last month you spent $50 in fast food and $0 in savings, so next month you make a goal to spend $20 in fast food and $30 in savings. These small changes will add up over time!
This step you’ll do over and over again. Each month, track your expenses by taking money out of your categories, and add to the categories when you get paid.
With time you’ll be able to spend less money in areas that don’t matter as much to you and more money in the categories that excite you!
Pay Yourself.
I highly recommend you start a ‘Savings’ category if you don’t have one yet. One of the most frustrating things that can happen when starting a budget is that some emergency comes up, making you take money away from your goal!
How lame would it be if you had $1000 saved up for your car, but then you broke your arm and surgery was $1000.
Instead, have a savings fund.
This is one of the best ways to make money work for you. You do not have to give up on your goals when an emergency arises. You can prepare for emergencies and pay for them without losing stride IF you have a savings fund!
This fund also helps tremendously to give you peace of mind. Who knows whether or not a global pandemic will strike and you’ll be out of a job? That insecurity can be terrifying, unless you are prepared with enough savings to last you a few months. Start a savings fund today!
Be wise.
The next step for starting a budget is to be smart about using money. Spend less than you have. Put money in your savings and goal funds before you spend it on fast food or entertainment.
Find a goal you’re passionate about so that you’ll be willing to make changes to work for it. Figure out ways to cut down on your spending so that you can add to your goals faster!
You might eat out less, settle for hand-me-down clothes, or shop at thrift stores more often. You might also find new ways to earn more money, whether that’s by taking on more projects at work or finding work to do on the side.
Be creative (and fun!)
Don’t forget to have fun!
There are so many ways to enjoy life without money.
It is hard to keep up a budget when you feel that you are restraining yourself and putting life on hold. Instead, try to figure out ways to enjoy life in frugal ways.
You might find it helpful to look at lists of cheap date ideas, find ways to have a frugal wedding, or find free pastimes. Try finding a local farmer’s market, local sports events, museums, and libraries. Save money by spending quality time with people. You might become a person who is excellent at having fun on a budget with hikes, movie nights, game nights, etc.
Tap into your frugal self and discover new ways to have a lot of fun!
Commit to Revisit.
Start your budget today, but don’t forget about it tomorrow. Decide how often you’ll check on your budget and goal progress.
Weekly? Monthly?
Set up a schedule for yourself to budget. Set reminders. Make incentives. Help yourself to make ‘budgeting’ a habit.
This is a tool that you can use for your entire life! If you take time to master budgeting now, your future wealthier and intentional self will be so happy!
Be Accountable.
Include others!
One of the very best things I did to start a budget was to tell my dad about it. He loves to budget and was so excited for me to become a steward over my own money. He started to ask me about my budget every time we met. When I wasn’t motivated to budget for myself or my goals, I was motivated to make my dad proud!
It can be so helpful to have friends or family members aware of your budgeting.
Ask your included person to check up with you once in a while about the budget. They don’t need to necessarily see your bank account (note: please keep your financial records private!) but if you know that at any time they may ask “hey, how is that budget working for you?” then you might be sure to check up on it before you see the person!
I hope these tips can help you find the motivation and direction to start your own budget today!
Happy budgeting!
Tell me, what else do you struggle with when it comes to money management? What tools do you use to budget? Which budgeting tips work for you? Leave a reply below!