Budgeting sounds horrible; you have to sit down with your bank account and your bills and take a serious look at both of them. I get it, there is nothing fun about numbers, especially when those numbers have to do with how much money you have and what you’re allowed to spend it on. But budgeting isn’t about limitation—it’s about freedom. When you budget, you don’t have to worry about whether or not you can afford something, because you’ll already know.
If you’ve never tried to budget before, this is the perfect time to start. You’ll need to know just three things: your monthly take-home pay, your monthly bills, and your monthly expenses. If you don’t know any of these three numbers, you should find out as quickly as possible! Being ignorant of your money is the quickest way to lose it.
Now that you have the information you need, sit down at your kitchen table with a notebook and pen. If you have a spouse or partner, they should be included in the budgeting process as well. The only way to keep a household running smoothly is for everyone in the house to understand the money situation. Now that you’re all set, follow these simple steps:
- At the top of your piece of paper, write your monthly take-home pay.
- Next, write your monthly bills and subtract that number from your take-home pay.
- Follow that with your monthly expenses. Groceries and gas are two important items to take note of here.
- Once you have your bills and expenses out of the way, you have more options with what to do with the rest of your income. Set aside savings, money for eating out, “fun money” or whatever you like. I would recommend saving before anything else, but this step is ultimately up to you.
- Continue subtracting from your top number until you reach zero. Every single dollar should be accounted for, even down to vending machine money. This is the most crucial aspect of budgeting because this is what will keep you from wasting money on frivolous expenses.
Budgeting takes time, but it is time well spent. Knowing where every dollar goes will take away the anxiety of making sure that your money will make it to the end of the month, and you might even find that you have more money than you realize. If you’re interested in learning more about budgeting and personal finance, check out the book Total Money Makeover by Dave Ramsey. You have the power to take control of your finances, and adding budgeting to your monthly routine is the perfect first step.