Updated: Aug 1, 2021
“A lot of people look at being told to do a budget as if their life is being restricted. But the whole idea of budgeting is freeing because you’re getting your life under control, creating more choices and reducing anxiety,” -Clark Howard
Want more time and money to do the things you love without going broke?
One simply strategy to implement in your life to save more and spend less is to create a monthly spending plan. Consider the spending plan as your roadmap and guide to financial freedom. A monthly spending plan or budget is a strategic plan tracking how much money is coming in and out of your household every 30 days.
Making a monthly budget for the first time may seem overwhelming, but it doesn’t have to be complicated. After the initial set up it’s really easy and doesn’t take much time.
Before I paid off 33,000 worth of debt, saved 20k in one year, fired my boss, and began traveling the world, I first had to learn how to create and follow a monthly budget.
Follow these helpful tips to budget your finances:
1. Establish realistic financial goals. For example: pay off auto loan, take a vacation, pay off student loan debt, buy a home, set up a retirement fund, etc.
2. Determine your monthly net income. Net income is all money coming into your household on a monthly basis after taxes. Money not collected on a monthly basis can be factored into spending as projected income.
3. Calculate all expenses, including fixed and variable. Fixed expenses include: mortgage/rent, car loans, insurance premiums, etc. Variable expenses include food, transportation, utilities, clothing, and entertainment.
4. Set savings and debt payoff goals.
5. Record spending, comparing expected and actual values, and track progress throughout the month.
6. Be realistic and flexible. Things happen, but remember to stay the course and remain diligent.
Need additional help organizing your finances? Contact us for a free a consultation.