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Creating Your Budget Step-by-Step

Raise your hand if you hate the word “budget.”

Several years ago I would have been one of the people with both hands raised and waving my hands furiously to be noticed. To me a budget meant not using MY money the way I wanted.

It’s my money – why shouldn’t I do what I wanted with it?

What I’ve come to appreciate over the last years is that my budget keeps me healthy – financially, mentally, emotionally and even physically.

Without a budget I didn’t know where I was spending my money and how often it was going toward frivolous items I could do without. Today, I’m spending hours cleaning out a storage room and the rest of my home – of things I could have done without.

Without a budget I found that my credit card bills climbed faster than they should have. This caused me emotional and mental distress, which led to physical symptoms of stress.

Without a budget my financial health declined.

Everything in life should NOT center around money – but it appears that we all need money to accomplish the things in life we value. So, while money is not the end all to be all, it is the train that takes you where you want to go.

But, like a train, money is just a vehicle. It doesn’t have a life of it’s own. Money is not a living, breathing entity, but instead is a vehicle to help you accomplish what you set out to do in life.

Don’t worship your money. . . Use it.

And the best way to use your money is to know where, how and how much you are using it.

And the best way to do that is to have budget.

Of course, if you have an accountant who takes care of your expenses and gives you an allowance each week to spend, then you don’t have to worry about a budget because someone else is handling your budget for you.

If you run a business you have a budget for your expenses.

People who live a “millionaire lifestyle” do so within a budget or they’ll run through their money in months. It’s what happens to people who win the lottery. They aren’t used to handling that much money. They don’t use a budget and before they know it, they’re broke.

According to the National Endowment for Financial Education, 70 percent of people who win a lottery, or get a big windfall, will go broke.

Those are big numbers!  You might tell yourself that if you were lucky enough to win a million dollars you wouldn’t go broke. But, I’ll bet the lottery winners who go broke told themselves that too.

If yoFeb4WomanCIu can’t handle the small things in life, you won’t be able to handle the big things. So before you win the lottery, it’s time to learn how to deal with the money you already have.

Whether you have a lot or a little, to get more you have to manage what you already have. A budget is nothing more than an allowance you give yourself to spend each day, week and month based on the amount of money earned each month.

In Three Dirty Words: Budget and Net Worth you’ll find an outline of how to begin creating your budget. Although simple, you may not think it’s easy. That’s because you have to take a long look at the things you spend money on now, and don’t think twice about.

Now, you have to think twice!

I had a friend several years ago whose spending habits far outweighed her income. She had three children, two dogs, a mortgage and a deadbeat ex-husband. And still, she couldn’t get a handle on her spending. She continued to live the way they had when she was married and had two incomes.

Today she is in danger of losing her home. She’s had to sell off several family pieces of furniture, and her credit card debt is more of a mountain than a molehill.

Whether you’re in her position or in a better financial position, it’s never too late to stop, take stock of where you are and what you’re spending, before developing a plan that will improve your financial, emotional and mental health this year.

Start with the list of six things in Three Dirty Words and then let’s move on.

Use a spreadsheet to lay out your Spending Program for 2016.  I use Microsoft Excel, but OpenOffice is a free open source software spreadsheet program that operates in much the same way.

HOW TO . . . Or use the gift below

In the left column write out your consistent expenses each month and across the top write out the months of the year. Leave the first column next to the expense column blank and start January in column number 3.

Column number one will have your expenses, number two is what you budget for that expense each month and numbers three through 14 will be the months of the year. Column 15 will be the total for each expense for the year.

Below the expenses add your income sources. Tally your income sources and your expenses and then leave a row where you can subtract your income from your expenses.

This is an incredibly visual way to see where your money is coming and going.

If creating a spreadsheet isn’t something you relish, or you don’t want to take the time to learn the program, I have created one just for you.  Download your free gift using the links at the bottom of this page.

The spreadsheet is easy to use and has the formulas built in.  You should probably make a copy so if you mess up one of them, you’ll have a second to fall back on. I’ve also done a brief tutorial on how to use the spreadsheet. The link to the video is just below the download link for the spreadsheet.

Please leave me a comment about the spreadsheet, the article or anything else you’d like to talk about in the comment section. Please tell your friends to stop by and get their copy. They don’t have to subscribe to the magazine to get it . . . Unless they want to!

Your next step is to get in the daily habit of looking at your bank statement and whichever credit card you use consistently. Each morning I open up my bank account statement online and enter the new charges to my spreadsheet. It’s amazing how this little act of accountability can make a huge difference your end results!

 

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CLICK HERE to download the free budget spreadsheet.

 

CLICK HERE to watch the tutorial on how to use it.

 

 

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