How To Budget
Let's learn how to budget.
In my opinion, a budget is the best way to financial freedom.
I'm a huge Dave Ramsey fan. I have been for a number of years since I read his book Total Money Makeover. His daughter, Rachel Cruze, says "a budget doesn’t limit your freedom, it gives you freedom!" She is absolutely right!!
In my mind, there is nothing whatsoever restrictive about a budget! A budget gives you more freedom versus less freedom! I use an excel spreadsheet for my budget and when I look at my monthly budget, I am all smiles.
I am all smiles because I have accounted for my income and my expenses, then I get to see what I have left as discretionary income. Now it's party time because the discretionary income is mine to spend however I like. If I didn't have a budget showing me this, then I would spend the next two weeks or month in a constant state of worry, wondering if I am overspending. And I don't need that kind of hassle!
First, figure out the best method of budgeting for you. Is it a pen and spiral notebook? Is it an excel spreadsheet? Or is it a budgeting app or software?
Second, write out all of your sources of income in one column. Think hard to make sure that you capture everything. Include items such as your main source of income, your second job income, bonus money, small business income, child support, alimony income, yard sale income, etc. Just make sure you capture EVERYTHING.
Third, write out all of your expenses. ALL of your expenses. Don't forget expenses you only pay once a quarterly. Remember car maintenance that may only come up once every six months. Account for groceries and eating out, electricity and natural gas, lawn maintenance and weekly car washes, credit card payments, student loan repayments, health and life insurance payments, savings, fuel costs, etc... The point is DO NOT leave out any expenses, no matter when they occur.
Do the math!
Fourth, subtract the total amount of your expenses from the total amount of your income and voila'--you have yourself a budget!
A couple of other pointers. Tweak the budget every month until you reach what is called a "balanced budget". A balanced budget is where all of your income covers all of your expenses. Also, keep the budget simple. The simpler it is, the more likely you are to stick with it. And finally, make the budget personal to you. The more you can identify with YOUR budget, the more you will stick with it!
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