Whether you are trying to pay off debt, save for a house, car, or retirement, a budget is the foundation for your financial success.
My wife and I paid off $32,000 of debt in five months. We have paid for private school education for our children, luxury vacations, and my wife's law school tuition. We have done all this by the grace of God and by being on a BUDGET!
A budget does not place restrictions on the activities you enjoy doing. It gives you permission to do those activities by properly allocating your money. In fact, a budget gives you a plan for your money. Just as you make plans to accomplish goals in life (e.g., career, buying a house, going to college), you must make plans for your money. How can you accomplish your money goals without a plan?
3 TIPS BEFORE STARTING A BUDGET
1. Be realistic.
For example, if you normally spend $300 a month on restaurants, do not reduce your new restaurant budget to $50. Why? If your budget cuts are too drastic, you are more likely to overspend.
2. Create your monthly budget before a new month begins.
If you are creating a budget for July, complete your July budget before June ends. By completing your July budget before the month starts, you will be able to spend, save, and invest your money for that month according to your plan.
3. DO NOT GIVE UP!
It might take some time to get comfortable with budgeting your money. This is perfectly normal. If you veer off track, do not panic. It takes about 3 months to get the hang of budgeting therefore, give yourself some grace and be patient with the process. Just remember if you quit you are guaranteed to fail.
BUDGETING YOUR MONEY - ZERO-BASED BUDGET #budgeting #howtobudget
**Every dollar that you make must have a name**
ZERO-BASED BUDGET: MONTHLY INCOME (Net) - EXPENSES = 0
Place your monthly income at the top of your budget
List all your monthly expenses (including miscellaneous)
Subtract your expenses from your monthly income until it equals zero
Keep track of your spending for the entire month
Monthly Income: $5000
Expenses | Amount | Difference |
Rent | $1000 | $4000 |
Electric bill | $200 | $3800 |
Netflix | $20 | $3780 |
Phone | $150 | $3630 |
Car payment | $500 | $3130 |
Gas | $250 | $2880 |
Groceries | $500 | $2380 |
Restaurants | $200 | $2180 |
Emergency fund | $1780 | $400 |
Entertainment | $300 | $100 |
Miscellaneous | $100 | $0 |
You may use a budgeting app such as EveryDollar or a simple spreadsheet to create your monthly budget. Whatever you do, DON'T GIVE UP!!!
Download my free ebook for money tips and a step-by-step guide to budgeting. To schedule a free financial coaching consultation click here.