A budgeting guide can make the whole budgeting experience easier for you. But it is not a fun experience if you have never done it before. Don’t sweat it though, the fact that you are here reading this post on a budgeting guide for newbies is a fabulous step in the right direction.
For that reason, I am here to help guide you through the process of learning how to successfully budget.
I was a budget newbie not that long ago. I went from knowing nothing about money or budgeting to developing a budget plan that keeps me accountable. A tip for budgeting is to it update regularly.
I am going to walk you through step by step now on how to create a budget that is successful and that will give you the results you desire.
In my personal opinion, I believe that there are 6 VERY IMPORTANT MUST HAVE STEPS for all beginners.
If you aren’t convinced that budgeting is important or don’t know why you need one read This Article.
Developing A Budget
Use budget spreadsheets. They are a lifesaver, and they help keep you organized.
- Figure out your why
- Calculate monthly income
- Add all fixed expenses
- Set financial goals
- Subtract your expenses from your income
- Adjust and monitor
Powerful Budgeting Binder
Maybe you need a little extra help developing a budget that works for you, or maybe you need help getting your budget to do the heavy lifting for you. This budgeting binder will lay it all out for you and give you the tools you need to create a budget that is solid! A budgeting guide is a really good idea for beginner budgeters.
If you would like more tips and tricks on how to budget successfully I would love for you to join Powerful Budgeting Email Course and receive my Budgeting Binder for FREE!
Don’t skip past this section, just because you think it is unnecessary. Stick with me to become a budgeting pro!
If you have never had a budget before then there is a reason why you are wanting to start your first budget. Whether is be a baby on it’s way, saving for a vacation, getting out of debt ect. all of these reason can push us to be a bit more ADULT, which pushes us to living by a budget.
It is going to be the reason that keeps you motivated! That is why I am a huge fan of finding and knowing your why.
First off budgeting SUCKS and it will never be EASY, however, it can be simple.
Reality check, YES it is way easier and more fun no doubt to just do whatever you want with your money when you want to. This is why it is going to be so hard to stick to it.
But I’m giving you a one up right here right now. Write down your why, and make sure you see it everyday. It will make sure you stay in track and on the path to success.
Having your why on your mind constantly will motivate you through the “dark and tempting days.” A budgeting guide will also help in this aspect.
Tip of the day!
Set your WHY as you home screen on your phone! Then you will never forget and it will be a constant reminder to you.
Step 2: You Must Calculate Your Total Monthly Income
A budget can not be completed without first knowing what your income is.
List all of your income in your spreadsheet within a budgeting guide. This step is really important. You need to know what you are working with so don’t leave anything out. Include absolutely every source of income (like a side job or babysitting) all income should be accounted for.
You need to know your income so you can subtract your monthly expenses from income total.
Most people just take home a salary or have a steady full-time job. But if you are a business owner, have an additional part-time job, or side hustle, you should include these sources of income on your budget.
You will need to guesstimate your income for the month. If you do not live on a consistent income you should that the average of the last 3 months.
- House hold income
- Husbands job and mine $4230
- My side hustle $2135
- Babysitting $200
Step 3: Add All Of Your Fixed Monthly Expenses
Now is the time to make a list of all your monthly expenses.
To get started, start by listing your fixed expenses that are always the same. Your fixed expenses are the ones that you must pay, this should include debt. For example rent/mortgage, water bill, car payment, groceries, gas, and student loan. Think of the monthly bills that are non negotiable and must be paid. Include any in this portion.
You may be unsure of just what your monthly expenses are since you haven’t been budgeting for them. To find out you can login to your online accounts from the last couple months (2-4) and average out the number for each expense. It may not be perfect but you will get close to an exact number for each expense. In order to have an accurate budget, you need to be working with real numbers.
Follow a budgeting guide and always try to list your expenses in a line so everything is clearly seen, like this.
- Rent/mortgage: $1200
- Power Bill: $40
- Gas Bill: $35
- Groceries: $425
- Car payment: $445
- Fuel: $350
- Life Insurance: $125
- House Insurance: $105
- Debt payment: $350
- (continue filling in any other expenses that you have)
The more inclusive you can be in this step the better when first starting out a budget.
By breaking it down line by line you will see where your money in going clearly. Once you are no longer a newbie budgeter and you have a solid grip on how to do it you can combine and make categories for your expenses.
Once you have completed your list of fixed expenses I want you to move on to step three.
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Step 4: Setting Financial Goals (Discretionary Category)
Before you start adding in extra expenses such as entertainment, or spending money, you should take some time to think about your financial goals and your future. This is where a budgeting guide can really keep you on the straight and narrow.
This is so important because it will help you develop a customized plan for your budget and help you prioritize. This will help cut down on day-to-day spending habits and make you think twice before purchasing.
Now write out your financial goals,
- get out of debt
- build an emergency fund
- save for a down-payment on a house
- fund a retirement account.
Your Financial Future
Think about your financial future and where you want to be. Write down what your goals are.
The best way to make your goals a reality is to start thinking of them as expenses and include them in your budget plan. When you start thinking of your financial goals as an expense you start to prioritize them over petty expenses. Start paying into your goal monthly, don’t wait.
This will get you on the right track to attain the goals you set and creating a habit of saving.
- debt payment: $500
- emergency fund $250
- down-payment for a house $500
Typically, you wouldn’t think of your savings as an expense but, in this case for the purpose of budgeting, I want you to do just that.
Always remember a budget is directly made up your income and your expenses. It hones in on your cash flow. If there is money going out then it should be calculated into your budget as an expense.
Step 5: Subtract Your
Expenses From Your Income
Now it time to subtract your expenses from your income. A budgeting guide will make this very easy and clear for you.
If you get a positive number YAY! That means you are living within your means. (woohoo)
You can go back to your budget now, if you have a surplus of a couple of hundred dollars you can adjust your budget as you need to. For example, you can increase the number for debt repayment or increase your monthly savings. Every dollar in your income should have a purpose in your budget. This means completely planning out what every dollar is going to be used for.
If you are breaking even this means you have no margin. You are making exactly what you need. You may feel it is appropriate to adjust your budget to create a margin in the form of a discretionary category. Unplanned things happen in life and it is best to be prepared before they occur.
You’re Spending Too Much
Now if you get a negative number, this simply means you are spending too much money and are not living within your means. (this is not good and causes trouble) With a negative number, you must go back into your budget and adjust some of your discretionary expenses or find a way to increase your income.
Another way to decrease discretionary spending is spending less on eating out, entertainment, or other non necessities. Make sure your finacial goals are being met before spendig on discretionary items. An example of this would be making the unwise decision to go on a vacation before having an emergency fund set up.
There is great powering in knowing, so what ever your number is, take the first step. Start planning for your financial future.
Now the hard stuff is completed. It is time to start monitoring and adjusting your expenses.
Step 6: Take Action, Monitor, And Adjust Your Budget
According to how your life turns out you needs to monitor and adjust your budget.
In my personally experience I have found taking the time to talk about your budget with your spouse regularly will help you keep moving forward. We do a bi-weekly meeting. This works for us because it keeps use fixed on our goals. It also help us make the necessary adjustments for them a month so we can stay on track. It doesn’t take long. Set aside 30 minutes to an hour to go over your accounts and make the budget updates. The point is to check in regularly! This is so important to ensuring success.
Reflect on your progress when you are monitoring your budget, and make needed changes. Let your budget be the system that helps you achieve your goals, and find financial success.
Dont be oblivious! Take Action!
If you haven’t already grab your free budgeting printables!
The first few months of budgeting will be rocky and they will be rough. But that is okay you are learning. Just know nothing is going completely wrong. You will be doing some things right. Mistakes are totally okay! You are making progress!
Sticking with it will ensure you are successful! (I promise it will be worth it.)
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