1. Determine Your Income And Expenses
For income, look at your W-2’s or your pay stubs if you are employed by an employer. Or if you are self employed, then look at past income and project what your average income will be.
For expenses, I go back one full year and jot down each month’s expenses on a worksheet. Then I average out the cost of each category. Be sure to take into consideration bills that occur less frequently, like insurances and taxes.
Here’s a handy spreadsheet that I printed out and used:
https://www.consumer.gov/content/make-budget-worksheet
2. Reduce Your Expenses So You Are Living Within Your Means
There are two ways to do this:
- Make more money. Some ideas for this would be: a second job, Door Dash or some other service, down size your belongings if that is feasible.
- Trim your expenses. Creative ways to do this is to reduce your grocery expenditures; cut out frivolous costs, like Netflix, HBO, excessive cell phone plans, etc.
Here’s a comprehensive list of expenses to look at for reducing your out-go:
3. Make A Plan & Stick To It
After you have compiled all the above figures, then organize it with an app, program, or spreadsheet.
For money that you spend that is not a recurring monthly bill, like food and entertainment, I suggest you withdraw cash from your account, and pay only with cash. (Think the Dave Ramsey envelope method)
Be hyper-diligent to be realistic with what you spend on groceries. Make out menus, lists, and shop & cook based on deals and sales. Allow some wiggle room in your food budget to be able to purchase in bulk and freeze for later.
Frivolous expenses may need to be reduced or put on hold while you pay off debt.
Remember: debt = slavery
Having debt (even your home mortgage) keeps you shackled financially. Work diligently to dig yourself out of debt.
There is a lot of detailed info on how to get on top of your financial game. Take advantage of internet resources for this!
4. Rinse & Repeat
You most likely will not get it right the first time you start a budget, if you have never used one before.
But keep at it!
Work hard to bring your spending into control. Seek out a spouse or friend to hold you accountable. Find a friend that is financially responsible to help keep you on track.
And if you falter or fail, get back up and try again. And again. And again. Until you succeed.
You can do this!
