Learning to Create an Everyday Budget

Ever gone to make a purchase, then oops, there’s not enough money left in your account?
It happens to the best of us, but creating a budget is a great way to avoid such situations.

Evaluate Your Spending

First thing’s first, let’s figure out where all that money is going. In order to do that, start writing down everything you’re spending money on. Keep a notepad with you, or track it in your phone for at least a week. Be certain to record every purchase, even those $2 breath mints you picked up on impulse. Every penny counts. This will expose where you are thoughtlessly spending on things you probably don’t need. From there, you can look at the big picture and start identifying what you should and shouldn’t be spending money on. This also helps to educate you on how to start using your money as a tool to help you achieve things in life as opposed to just something you need to function day to day.

Wants & Needs 

Differentiate between those things that make life extra fun or comfortable – your wants, and the things that are basic necessities – your needs. It may help to sit down and make a two column list of “wants” and “needs.” Then, using your spending tracking notes, put everything into the appropriate columns. You will find that there is a lot you can cut down on, and you probably never thought about it before. Adjustments such as packing a lunch at home instead of eating out is not only healthier, but much more budget friendly.

Make a Budgeting Plan & Stick to It

You’ve done a lot of preparing to make a budget, so now it’s time to make your budget plan and stick with it. One of the best ways to budget is by using the 50-30-20 rule. This rule prescribes utilizing your net income by spending 50% on needs, 30% on wants, and 20% towards savings or paying off debts. It’s easy to follow, and you don’t even have to give up on your everyday wants, like that gym membership. Creating a plan you can follow regularly helps you become more financially stable now and into the future.

Staying on Target with Your Budget

The most important part of this whole process is continuing to track your spending and budget according to your plan. Remember to give yourself a break and be patient while you form these new habits. There will be bumps in the road. Take them in stride and stay focused on your goals. Set aside a little time every week to manage your budget, and your bank account will start rewarding you a little more every month. Another fantastic benefit of doing all this budgeting is that you will see a reduction in your stress levels. Taking control of your financial situation empowers you. It’s a health benefit you can take to the bank.