If you’re lazy like me, you’ll want these simple easy to use how to budget steps.
Just do a little work ahead of time and you’ll be set up until the next time your money situation changes.
I was living paycheck to paycheck. Receiving money every two weeks and putting it all on my credit card. I was surviving instead of thriving.
If this sounds like you, don’t worry! This easy step-by-step of how to budget will get you in control of your money!
With a simple budget in place, you’ll keep up with your debt while saving, have spending money and pay for your expense with ease.
1. Set Your Financial Goals
Starting with setting your financial goals is extremely important. This will give you the motivation to keep going. Give you the carrot to your stick.
You need goals to create your budget. Head over to this link if you don’t have Financial Goals yet and then come back here.
2. Your Income
Grab a piece of paper or the FREE Budget Outline Printables and write down how much you make in a month, as well as, break it down to how frequent you get paid.
3. List your expenses
List all your expenses, daily, monthly, yearly. Caroline Vencil has a great list for you to reference. Now that you’ve written down all your expenses, separate them into categories, I use a letter system, A for Business Expenses, B for Yearly Expenses, C for more frequent Expenses, D for Gifts/Vacation, E for Cash expenses, F for bi-weekly expenses.
4. Map out your expenses
Now that you have your categories, allocate when you’ll be contributing to your expenses. If you’re like me who gets paid every 2 weeks, you’ll have 2 extra paychecks in a year, it’s always nice to have that extra paycheck, but I don’t spend it on just anything, I put it towards debt.
5. Create Bank Accounts
By creating multiple accounts and separating your categories, you’ll be able to tackle those expenses, since you’ll already have that money tucked away. I have the following saving accounts which correspond with the categories that I’ve created earlier:
B Yearly Expenses
D Dogs (food/vet/supplies)
RSPS (Retirement Savings)
6. Use The Envelope System
The Envelope System is quite easy to use and implement. I used to just put everything on my credit card and worry about it later.
Then came the bill and it was MASSIVE. Playing dumb, I didn’t know why it was so high.
Now as much as I can, I pay with Cash.
I take out the money I know I’ll use during the two weeks and separate it into envelopes.
I have an envelope for:
- Laundry (we have a coin machine in our apartment building)
- Date Night
7. Refine and Follow
Now that everything’s written down and organized, it’s time to clean up and rewrite your budget. Every paycheck, refer back to your budget and allocate your funds according to your pay. Also when you receive a raise, it’s a good time to revisit and decide where to put this new money.
8. Sticking With Your Budget
- Track your debt: There’s nothing more satisfying than seeing the progress of your hard work. Make sure to keep track of your debt and refer to it as you’re on your financial journey to encourage yourself.
- Track your money: If you’re spending impulsively, make sure to start keeping track of these buys, you’ll see these little buys add up over time.
- If you fall off the wagon: just get back on. You can even try a limited no spend month where you can get creative with what’s in the pantry!
9. What to do if you’re DEEP in Debt?
My boyfriend and I are quite lucky, we just have 2 major debts, him his school and me my car. So we don’t have a lot of debt and we’re managing it well.
But what if you have a maxed out credit card, a car, school, mortgage, and a can of potatoes?!
I’d use something called the Snowball Effect, referred to in The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness by Dave Ramsey. Where you take your biggest debt and attack it with as much money as you can while paying minimum payments on your other debts.
Instead of having all your debt slowly going down, here you’ll see good progress and it will motivate and encourage you.
Now that you have your budget down on paper, you’ll love it! I know I do. You’ll have the money ready for those little expected and unexpected events. You’ll start seeing your debt decrease, and hopefully be gone before you know it!
Do you have another method of keeping track of your budget? If so, what is it?