Introduction to Creating a Budget That Works for You

If you’re experiencing some financial difficulties, then getting organized and more focused is absolutely critical if you want to reverse your financial woes. To do that, you need a structured system that makes things a little easier to manage.

You need a system that improves your chances for success and keeps you on the right track.

This blog post and introduction to creating a budget gives you the system you need to organize your finances.

You’ll learn the basics and will be able to start applying all the steps immediately. Without a strict spending pattern, it is very difficult to reduce your monthly costs. And it’s twice as hard if your expenses outweigh your income. The purpose of budgeting and sticking to it is not only to help you save money now, but to improve your financial future.

Whether you’re looking to save up for a big vacation, a college education, or a house — a budget can help make those dreams a reality. While it may seem far-fetched now, if executed properly and with dedication, in a few months, you’ll reap the benefits.

This introduction article shows you how to put it all together.And just as important, it shows you what to do after putting your budget together.

How to Make a Budget and Stick to It

There are 5 simple steps to smart budgeting, and you should try to do each one as good as you possibly can. If things get too difficult for you, you can simply adjust the plan to fit your needs.

Here are the five steps…

#1 Write Down How Much Money You Earn & Spend

Include all sources of income, whether it’s your full-time job, child support, SSI, or odd jobs here and there, you’ll need to list all sources. Next, make a list of all of your expenses. Do not skimp or leave anything out.

Include your rent or mortgage, car payments, fuel expenses, utilities, groceries, entertainment, and any other extras, such as pet care, prescriptions, or parking; write down every expense to the last penny.

The best way to accurately reflect your daily expenses is by saving receipts and writing down the exact amount of money you spend EACH DAY.

#2 Live within your means

If you are spending more than you’re earning, you’ll need to reduce some of your expenses. If the difference is small, cutting back in areas such as entertainment or groceries may be necessary. Is eating out that important?

Do you really need to have all those movie channels?

These are the types of questions you need to ask yourself and determine what expenses you are willing to cut out of your budget.

However, if the difference is large, you may need to consider bigger changes, such as refinancing your mortgage, or downsizing your vehicle.

If you’re unwilling to sacrifice, you may need to start searching for a higher paying job, or even take on a second job. By itself, budgeting might not be enough. If your income does, in fact, cover your expenses, you still may want to trim off some excess here and there in order to save more money.

And if you’re deep in credit card debt, then you might want to consider debt consolidation to assist you in lowering your monthly and yearly costs.
You should also try to save money for an emergency fund.

It is recommended that you have at least 3 months’ worth of income saved up in case of an emergency. This will greatly reduce the amount of debt you incur as a result of an unexpected event, such as a car accident or medical emergency. Such events can throw you in to debt quickly.

#3 Change the Way You Use Credit Cards

Credit cards are great for improving your credit score, but if they’re maxed out every month, they’re not going to do you much good. To avoid this scenario, pay cash whenever you can or use a debit card that will not allow you to make purchases if the money is not in your account.

This will prevent you from making purchases when you do not have the money readily available. And it helps prevent credit card debt. If you do decide to use credit cards, however, make sure to pay the full balance each month to avoid interest charges.

#4 Start Saving Money

If you’re bills are destroying your chances of saving money and you’re unsure of how you’re going to start adding to that savings account of yours, you’ll need to get organized. Every time you’re paid, pay off the necessary expenses first: Shelter, transportation, utilities, and food.

Set aside money for any other expenses that you might have and put the rest in savings. This will prevent your entire paycheck from being spent in one sitting and helps in creating a monthly budget that works for you.

Always be on the lookout for other ways to save. Small changes can make all the difference in your budget. For example, packing your lunch instead of heading out to a restaurant can save you hundreds of dollars per week. Clipping coupons can help you save on groceries.

Sometimes, you may even overlook some of the things that are costing you. For example, do you buy the more expensive brands on many of the things you purchase?

Choosing a less expensive brand can save you quite a few dollars each week. Purchasing generic groceries instead of name-brand can save you hundreds of dollars. These seemingly insignificant changes can put some significant amounts of cash into your savings account.

#5 Don’t Be Afraid to Make Tweaks

Don’t get down on yourself if your financial plan isn’t working from the beginning. Simply revise, edit, and review until it fits your needs.

Make sure that you’re using every last penny in a practical way, and that you’re not just blowing your cash whenever you get it.

At first, it might seem impossible to cut back on spending and actually save money, but once you get into a routine, you’ll find that the money is adding up quicker than you could have imagined.

The more you start saving, the more you will be motivated to save more.

Our final thoughts…

The overbearing weight of debt is one of the biggest problems facing many people today.

Families are carrying mortgages, student loans, auto payments, and credit cards.  It has become an incredible burden on many.

By creating a budget and following it, you can find freedom, not only from debt, but from money.  And if you can consistently find ways to live on less you will open the door to true financial freedom.

Your day to day living expenses such as food, utilities, gas, and rent or mortgage are things you absolutely need to live and survive.

Anything else you plan on buying for the month, should get careful thought and consideration from you as to whether it’s really needed.

That’s what budgeting is all about. It’s about making smarter buying decisions. It’s about smarter money management.