How to Make a Budget
April 30, 2018
Making a budget for the first time can be a little intimidating. I’ve been keeping a budget for about five years now. I’d love to say that I did it right the first time and never had a problem sticking to my budget but, that would be a lie. The fact of the matter is that it took time for me to perfect my budget. Every day I have to work on sticking to it. Times have changed and so has my life and my budgeting needs. I was married with two young children five years ago, and now I’m a single mom with teenagers. My budget is a living organism, constantly changing as my families’ needs change.
The most important part of creating a budget is getting your priorities straight. If you’re looking for information about a budget then you’ve probably run into a few problems in the money management department. That’s OK, it happens to most people. Try to start with the things your household absolutely must allow for: groceries, electricity, water, rent, gas and phone. Hopefully after budgeting for these necessities you can then allow for other necessary expenses. Please, don’t forget about the expenses that only show up once a year or every few months: oil changes, car/life insurance, savings, tithe, car tag and clothing, hair cuts, misc.
You may not consider savings a necessity. But, if you consider all of the things that can and do go wrong, you will see that having some savings is very important. You have to save up for the occasional car break down and medical emergency. These things won’t skip your house just because you have a positive attitude. Savings should be first on your list if possible and try to find some money to give to your local church or charity. Giving back not only makes you feel good, but it’s part of making your budget work. The more you give, the more you get back over time. If you can afford to give, I highly recommend it.
After you’ve budgeted the basic household expenses, it’s time to add your debt and extras. I have a budget for eating out, entertainment, school supplies, cosmetics, spending money and of course gifts. Now that I have teenagers, I’ve learned that I need to budget for things like prom dresses, school clothes, eye glasses, school sports and braces. Sometimes, I have to cut back in some areas to create a budget for another. Recently, for example, I lowered my grocery and gas budget so that I could start a small prom dress budget. Last year I found out how expensive those dresses are. I decided that it would be a lot easier to set aside $10 a month than to dish out $100 and rob my budget to pay for a dress. I’m not as worried about prom expenses this year and it gives me a feeling of relief to know that I prepared for it ahead of time.
Over the past three years I’ve fallen in love with spread sheets, at least as it pertains to budgets. I use an excel spread sheet so I can have a worksheet for each type of budget. I highly recommend having a monthly budget. This serves as a quick reference sheet. I start with my net salary and subtract each bill and try to make sure I’ve spent every penny. It’s not that I want to live week to week, I want to make sure I know where my money is going. Sure, sometimes it’s hard to stick to the budget, but it’s worth it when I need something and already have the money set aside.
Unlike some people, I like to take this budget thing a step further. I also have a weekly budget. Since my paycheck varies from week to week, I have a spreadsheet that lists my net income for each week and subtracts the bills for that week. For example, this week I may make $600 net. I’ll put this at the top of the column and subtract the cost of groceries, gas, rent, utilities, gifts, tithe, cable and spending money. I even have a separate spreadsheet for my debts. I don’t keep them separate from my weekly budget but I’m a little obsessed. I enjoy counting down the days until my debts are paid off. And when I say obsessed, I check my weekly budget several times a day and my debts at least 3 times a week. It doesn’t change that quickly but it helps me keep it at the front of my mind.
Years ago, I would forget to pay my bills on time or write checks when I knew the money wouldn’t be there for a couple of days. I was constantly floating checks and counting on the slow banking system to work in my favor. It didn’t always work, of course. I also had a debit problem. No, that’s not a misspelling. I did mean that I had a debit problem. If you have this problem then you know exactly what I’m talking about. Sometimes, I would forget to record my debits and over spend my budget. I just can’t afford to make those types of mistakes anymore. I never really could afford to make those mistakes.
I’ve read several books on the subject and then took what I learned and adjusted the information to fit my lifestyle and personality. I highly recommend reading Dave Ramsey’s book The Total Money Makeover and any of Larry Burkett’s budgeting books. Also, if you need more help than this, I highly recommend taking a budgeting class. We have several offered at our local churches. You may have some in your area. Crown Financial Ministries offers a class in money management as does, Dave Ramsey.