There are so many ways of making a budget – you just need to figure out what works for you and your family.
You can choose to make one that will track every penny – or maybe take a bit more of a laid back approach with less categories and general tracking.
The best way to start is just to figure out what you have coming in, and what NEEDS to go out every month. Things like housing, insurance – all those fixed costs. It’s worth sitting down and making a list of all of them. Some will be monthly, some are large annual fees – you need to find them all.
Once you figure those out, then you have some choices to make. You might start to feel stuck at that point – but even though those are fixed, you can probably figure out a way to get them lower. Call all of them and see what can be done – lower payments, lower interest rate, special deals etc. This is the fastest way to start to lower some costs. Frees up more for everything else, and this will be on a repeat basis so those savings will really add up.
After that you need to figure out what your goals are, is there enough to cover everything and so on.
Here’s a great quick worksheet to build a budget. After you figure out all of your costs and fill in the budget, then you can decide how to proceed. Do you want to do a major cleanup – live on cash and use a jar system, do you want to track it all online and only use credit cards (pay it off right away, and not as much cash to track or spend either).
A budget is a good idea if you’re trying to do a crash financial diet, just live within your means, trying to save up more, figure out how to reduce costs and where it’s all going – it’s really for everyone.
Another good way is tracking all of your spending. Time consuming at first, but after a month or two you can start to see patterns, and see what you can eliminate or lower. Just keeping track becomes a great incentive to spend less – seeing the numbers right there makes a huge difference.
If you’re trying to eliminate or lower the extras, use this expenses calculator to really see the difference. This is good if you’re trying to do it as a couple or a family – real results right away. You list what you’re spending, what you can cut or lower – and then it shows you what you’ll save and how much that would add up to with interest after 1 year, 2 and up to 25 years. Seeing what it totals up to can be a big incentive to get rid of some extras.
It can take a bit of time to get started, but there are tons of programs apart from the ones I listed too – and if you really want to jumpstart a budget, or just want to lower costs for a few months try doing a Spend Nothing Challenge for a month or two.