How to Create Your First Budget
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So, you want to create a budget. Awesome! A budget will help you get your finances in order and push you to save more and spend less. It’s what helped me have the finances to take a solo trip to Hawaii. As well as keep a safety cushion in case any accidents or problems happen in my life. It’s the best tool to help you get out of debt and on the road towards following your dreams.
Creating your first budget doesn’t need to be an agonizing process. All you need are a few simple tools, some time, and persistence, and you’ll be ready to go.
Set Aside a Couple of Hours to Make Your Budget
Dealing with your money can be a huge headache. I recommend giving yourself a few hours for the task. Pick a day where you know you’ll have some quiet time. Go to the restroom, get a glass of water, turn off your phone, and sit in a comfy chair. Today you’re creating a budget. You’ve got this.
Print out a Budget Template
The first thing you need is a budget template. I highly recommend printing out this budget template I found on Dave Ramsey’s website The Monthly Cash Flow. It’s clear, easy to use, and completely free. His useful forms page also has a list of other templates you can use for other goals you may have. I just entered the categories onto an Excel sheet and voila. (If you’re not very familiar with Excel, this article from Tech Advisor is a great primer for the basic functions like Subtraction, Sums, or Additions.)
Print Our Your Banking Statement for the Month
Your statement will be key in figuring out exactly where your money goes each month. You can go online to your bank and print out the form easy and free. Also, grab a couple of highlighters and a pen while you’re at it. One highlighter will be used for your income. The other for your expenses. Label each expense with the categories on the template. Once finished, transfer the data into your new excel sheet.
The Ultimate Goal for Your Budget
The end goal for your budget is really simple. Spend less than you make. Easy to say, hard to do. Trust me, I know. When I don’t feel like making breakfast or lunch I’ll happily make a trip to McDonald’s or Dairy Queen even if I need to put my money elsewhere.
But this is the first step for understanding your finances. You’re probably not going to be perfect at it, and that’s okay! The point is to create the habit of creating a budget and sticking with it.
Budgeting Key Takeaways
- Adjust your budget to fit your needs
- I get paid weekly so instead of a monthly budget, I’ve created one for each week. Maybe you get paid biweekly or on commission. Adjust when necessary.
- Budgeting takes time to learn
- It’s okay if for the next few weeks, you struggle to keep your budgeting goals. This is practice, but important to learn.
- Your Budget will save you thousands if not millions of dollars
- This is a vital life skill. Money, like a knife, can be dangerous if you don’t know how to use it properly. It will quickly manage you unless you learn how to be its master.
What if You’re Drowning in Debt?
All kidding aside, it’s important not to panic. Debt can be incredibly stressful and many relationships can be torn apart because of money. HOWEVER, there are tools out there to help you.
First, create a budget. I also highly recommend reading Dave Ramsey’s book Financial Peace. (If you can’t buy a copy, find one at the library, borrow it from a friend, or ask for it for your birthday.) Ramsey has spent years studying finances and details exactly how to get out of debt with the snowball method. (Basically, pay off your smallest reoccurring bills first. Then once those are paid off, use that same amount to slowly pay off the bigger and bigger bills. He explains it much better in the book 😉 )
A budget will help you get your finances under control and know where your money is going. It can help you with owning a business, going to school, getting a car, or managing your home. It’s an important tool that can serve you for the rest of your life.
Did this post help you? Please like and share to spread the word. What skills and knowledge have helped you with your finances? Do you have any good books or recommendations? Please make a comment below.
If you’re interested in learning more about finances there’s one more book I’d recommend. First Steps to Wealth by Dani Johnson (a self made millionaire). A great read and completely free when you sign up for her email list. (Which also has some great tips and tricks for living the good life).
Thanks for reading and I hope you have a marvelous weekend!