5 Steps to Creating a Budget

April 5, 2018 2 Comments

5 Steps to Creating a Budget 

When I say Dave Ramsey, do you cringe? I used to. I thought starting a budget meant the fun was over. My money was just that – mine. I also thought creating a budget was super complicated. So if you’re about to bow out because budgeting is too overwhelming for you, stay with me! We are going to go through five quick and easy steps to create a budget.

I knew it was time to get serious about budgeting when I just couldn’t understand where all my money was going. Payday rolled around, and it never failed. By the next payday I was baffled at the fact that I was barely making it… again.

When my husband and I got engaged we were a part of a small group. We started going through Dave Ramsey’s Financial Peace University . One of the first things we had to do was go through our monthly expenses. And come to find out, eating out was taking up the majority of my budget. How was I spending $700/month eating out? I mean I love me some Chick-fil-A, but dang! That is a huge chunk of money. It really shook me.

I started analyzing all of it. I began keeping track of every expense and eventually started a budget using the EveryDollar App. We now use an app called YNAB, but I’d suggest starting with the EveryDollar App first! Financial Peace University changed the game for me. It opened my eyes and helped me realize that it is actually possible to create a budget and stick to it. The majority of the course offers common sense solutions, but there were still so many light bulb moments.

Alright, let’s get our budget on! #nerdalert. Here are 5 quick steps to create your budget!

1. Calculate your monthly income.

This can be tough if you don’t have a fixed income. But the best way to calculate it is to go back 2-3 months and figure out an average of what you’re general income will be.

2. Track all of your spending.

ALL OF IT! Even the $700 you’re spending on take out. If you’re overwhelmed, just go through the last month. Look at what you spent, make a list and put each item into a spending category.

3. Make a list of all of your categories.

Add up what you are spending in each category. Then break them down into percentages. Here is what Dave Ramsey recommends for each spending category.

4. Create your budget.

Whether you choose to use an app I mentioned earlier, or create your own excel spread sheet, just choose something! Get a system going and stick to it. Look at what you’re spending in each category, and adjust that to what you want to spend. Challenge yourself to save money by meal planning, comparison shopping, checking out the local free events, etc. Some examples of where you could possible cut include: dining out, memberships and subscriptions, limit shopping trips (I see you, Target), cable/internet (just call them to see if there’s a better plan!), and online shopping (RIP, Amazon Prime).

5. Adjust as needed.

It is ok to adjust as needed. This will not go perfectly the first, second or even third time around. It takes a while to find your sweet spot. Give yourself grace, but also commit to your goals each month. I’m already so proud of you! You’ve got this.

 

Don’t let budgeting completely overwhelm you. Remember that is in an amazing tool if used correctly. Making a budget was the easy part for me. It was easy to write down what I wanted to spend, but much harder to follow through. It can be discouraging at times to feel like you’re missing out on that iced caramel macchiato (mmmhmm you know what I’m talking about), but don’t let it keep you from making coffee at home! Make budget cuts where you can. Our biggest family goal is to spend less money and have more family time. I cut out the afternoon trips to Starbucks, and the trips to Target to get “just one thing.” And it made SUCH a difference. Don’t let spending just happen to you, YOU get to tell your money what to do. You got this, friend. You got this!

 

love + donuts,

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