A blog post on budgeting, this is going to be sexy.
Seriously, as uninteresting as this topic can be, every beginning to fiscal responsibility starts with a budget. It’s pretty much impossible to get ahead and save money if you don’t have a plan in place. Only if your first name is P. and your last name is Diddy should you toss your money around without considering the consequences.
For years I struggled a bit with managing my dollars and sense. (Bad pun, I know.) Then I started following a budget and that all changed. I was able to put money into savings, I stopped struggling to pay bills on time, and I started spending money on things I actually cared about. Well, then I started planning a wedding and with a lot of other things my budget went out the window. It’s been a little over four months now, and things have settled down so it’s a perfect time to get back on track.
My simple guidelines for doing a budget:
- Create three lists: income (money you earn), necessary spending (things you don’t have control over – electric bill, rent, etc.), discretionary spending (things you do have control over – going out to eat, clothing, travel, etc.) making sure you account for everything.
- Start with your current balance and the current date and then plug in each item on your lists in the correct order. After each income addition make sure to include a line item for a savings contribution. For discretionary expenses, just put in what you’d like to be able to spend, if you end up going negative it’s okay at this step. You can opt to do one month at a time or you can do several at once.
- Adjust the discretionary amounts until you have a positive cash-flow. This is your budget.
- Track your spending for the next month or two. Use these numbers to adjust your next budget.
So I went through and now I have a budget for my personal spending and the house spending for the next 3 months. I plan on doing #99 – Track spending for an entire month sometime during the next 3 months so I can adjust the next budget to be more accurate.