Making a Budget and Sticking With It

I wouldn’t know how to even begin…

Welcome to a new series of posts here at Budget Smart Girl.

I’ve had lots of people e-mail me asking for tips on budgeting and the above sentence has been a common one so I thought every Thursday our Budget Smart Girl community will focus on putting together a budget and best of all, sticking with it.

It’s not that hard and all it takes is a little understanding and a commitment on your part to put things in motion.

An added bonus is it doesn’t have to be boring…

Develop a Budget

Step number one is setting up a realistic budget. And let’s key in on that word realistic. Take baby steps and evaluate each one as you go.

You can use a spreadsheet or even software to get started.

Write Down Your Net Income

What do you earn before all expenses?

Track Your Spending 

Let’s try this for a month and see how things go.

For 30 days, track your spending habits.

The only way to see where your money really goes is to track everything you spend money on – whether it’s cash, credit, or a debit card.

It doesn’t matter if it’s 50 cents or $500, right down everything you’ve spent and what it was used for.

One thing to start with is fixed spending such as rent, mortgage, utilities etc. All things that are necessary for your day to day living.

Then make a separate list with variable spending such as eating out, entertainment, groceries, and gas.

Set Goals

After 30 days, (hopefully), you’ve got a better idea about what your budget looks like. Maybe you noticed that you have lots of items in your variable spending that you weren’t aware of?

With all the information on hand it’s time to set some financial goals.

You can either start small with short-term goals for say six months or a year. Some people like to go with a longer range of say five years and then one final thing you can do is set a long-term goal for say retirement. And this is where being realistic comes into play. Don’t say you’re going to save X amount of money in six-months if you know that’s impossible. It’s better to start small, see the results, be more motivated and then know you can do it and move onto to another goal.

Write Down a Plan

So, what your goals right now?

What are your goals for the future?

Let’s write it down.

Also, make a note of everything you’ve learned from tracking your spending for 30 days.

Maybe you have a membership to say a health club that you’ve seldom used, an app that’s never been used or you signed up for cable TV and you barely watch it any more.

Adjust as You Go

Don’t think that budgets are always set in stone. Life circumstances change. You might get an unexpected bill or on the other hand, a windfall. You might even change jobs or lose one so be sure to go back and make adjustments each and every time something major happens in your life.

See you next time when we’ll focus on setting up an emergency fund.