stretchingcents

How to Budget: Getting Started

on April 12, 2017

Updated from January 2012

The number one rule to saving money is not spending more than you have.  The number two rule is knowing how much money you have at your disposal! The best (and maybe only) way to do this is by creating a budget.  It can take months to get a working budget for you and your family, and you will constantly have to update it as life changes.  Tonight I’ll walk you through a few steps to get started.

The first thing you need to do is get an idea of how much you typically spend and create a few categories of spending.  If you are paid monthly it is a little easier to set up a monthly budget.  If you get paid weekly, you may want to start just budgeting for a week, but once you have enough saved where you could hold your checks and cash them at the end of the month the budget process will be a bit easier.  I think the monthly budget is easier since most bills are due monthly.

  1. If you use online banking, go back about 3 months and start making list of what your spend your money on, and how much. If you don’t have a way to look at the past month, just write down everything you spend your money on starting now. You will want to create categories for each expense.  The categories in our budget are:
  • Groceries
  • Fast Food/Eating out
  • Bills
  • Gas/Car
  • Clothes
  • Pet
  • School
  • Medical
  • Baby/Kids
  • Church
  • Savings
  • Other (for us this is usually household type stuff like cleaning supplies, toilet paper, etc)
  • One Time Expense (when something random happens, like you need to buy someone a gift)

Calculate the average (total for category/ # of months)  you spend on each category,

2) Next make a list of things that cost money that happen only once or twice a year.  Ideally you will put away a little each month so these are covered when the bill is due. Our list includes:

  • Vacation
  • Car insurance
  • Property Tax
  • Christmas
  • Amazon Prime
  • Kids sports (ballet, basketball, and t-ball)

Figure up how much you need to set aside each month in order to have the $$ available when the bill will be due.  (Example- Amazon Prime is $90 per year so 90/12=7.50 so we set aside $7.50 each month to cover this expense)

3) Add it all up, and see if it is equal to or less than your monthly income.   If it is less than what you make celebrate!! If it is more than what you make, see if you notice any areas you can cut your spending, and keep reading my blog for tips on how to get your spending down.  Remember- your only choice if the numbers don’t balance is to spend less or make more!

Attached is a great document to use when calculating your monthly expenses.

Cash Flow Plan

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2 responses to “How to Budget: Getting Started

  1. […] you have tracked your spending for a little while, you should have a rough idea of how much you spend each month, and some basic […]

  2. […] Another key element of stockpiling is to not blow your budget trying to get your stockpile started.  It is best to work at it slowly.  I have $45 a week to spend on groceries.  I use that money first to buy what I need, then with the leftover I stock up on any good deals.  If there is nothing worth stocking up on, I save the extra money for another week.  If you don’t have any spare money, don’t worry, just keep watching the sales and eventually you will have a week where you come in under your budget. (You do have a budget right???? If not- go to my post on how to create a budget!) […]

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