It can be difficult to come up with a plan for everything in your life. This is
especially true when it comes to making a financial plan or budget that will
help you achieve financial success. It will be a hard road and you will face
many challenges while trying to adhere to a budget but it is well worth it
and will prove to be very beneficial in the future.
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Budgeting can be confusing and overwhelming when you first start. Do not worry, keep reading and we will get you started in the right direction with ease. You need to create a budget that works for you, there are lots of different options if you would like to explore them check out My Budgeting Basic Ebook+Budget Binder it explains different types of budgets, how to use them, along with a 40+page budget sheets and how to fill them according to your own budget.
If you are like most people, you have ups and downs when it comes to your financial situation. In most cases, there are many more down times than up. What if I were to tell you that your situation can be much better would you believe me?
Well you should because it is true!
Many people often hinder their own financial success because their mindset gets in the way. They may think that success is not possible and therefore they in fact make it impossible.
The mind is very powerful so you must think positively while trying to achieve financial success and you will be able to achieve your goals. For more on mindset check out unleashing a growth mindset.
Achieving financial success can be done a lot easier than you probably think. If you are determined and know that you want to change your financial situation in life you will surely be able to do it. It is important that you know however that the first and most important step in achieving financial success is creating a budget, My Budgeting Basic Ebook+Budget Binder, can help you with that.
Budgeting Foundation
Creating a strong foundation will allow you to build a large financial house on solid ground and be able to take yourself and your money to great levels of success.
What is Your Current Financial Situation?
If you want to create a budget that works for you it is important that you take the time to determine what your current financial situation is. You must be honest with yourself during this process, no matter how difficult it maybe. You cannot make your situation seem better than it is, if it is bad that’s OK, that’s what we are here for. It is in realizing how bad your financial situation is that will motivate you to create a budget that will work for you. As humans it is usually discomfort that will push us to change our behaviors.
What does Your Financial Future Look Like?
While trying to create a budget it is important to consider what your financial future will look like if you do not create a budget for yourself. Try to visualize what your life will be like if you do not get your finances in order. Think of what your family may go through and the hard times that they will all have to face. What if sometime in the future you cannot even put food on the table? What if that time in the future is sooner than you think?
These visualizations and thoughts are meant to be a reality check and a motivator to help you create and stick to a budget. It may be scary to think about it, but taking these steps to change your future can impact you and your family futures.
How Much Money Do You Want?
It is important for you to set financial goals for yourself because they will help you stick to your budget. It is why My Budgeting Basic Ebook+Budget Binder has several pages dedicated to setting your goals. Instead of trying to set an exact figure of money as your goal, try instead at first with a general number to serve as a gauge, as you try to determine if you have enough money for that goal right now. Picking an exact number is a sure way to drive someone crazy and set them up for failure. Having a general number is much more beneficial because it can let you know if you’re pulling in more or less money than is needed.
Being Realistic
When trying to create a budget for yourself it is important that you always remain reasonable with yourself. Do not make an outrageous budget that you cannot follow. This is a sure way to set yourself up for failure. Keep in mind, you may have to create different budgets as the time goes by.
You will want to start with a less complicated budget that will be easier for you to follow. Once you have been able to follow this budget without setbacks it is time to move on to more complicated and strict budgets.
Before you know it you will be budgeting at ease and all of life’s benefits will be flooding into your life.
As mentioned before, when making a budget one of the most important steps is figuring out what your current financial situation is. That will be figuring out the exact number of all the income(s) that you have. This can sometimes be a difficult process, when you trying to budget your pay with a weekly, bi-weekly, monthly or variable pay or have multiple forms of income to keep track of.
If you are a person who is not sure of how to or has difficulties when trying to figure out your exact income, you could benefit from seeing it written down, my 40+ page Budget Binder has all the pages you need to track your income, expenses, debts and goals.
Do not feel overwhelmed!
Yes, it may be a difficult process, but with these tips you will find financial success is right around the corner.
What Do You Make?
If you want to create a functional budget that is beneficial for you the first thing that you have to do is figure out how much money you make on a monthly basis. It is advised that you do this with a calculator because there will be many numbers involved and you want the calculations to be exact.
You need to factor in all forms of income, no matter how small they may be.
A lot of people make the mistake of short changing themselves while doing this step because they may think that certain forms of income are too small to count.
All forms of income must be counted; cutting yourself short can completely mess up your budget. All the small things add up so make sure to count them!
Calculate The Amount In Your Liquid Accounts:
A liquid account is a general term and can include many different types of accounts. It basically refers to any type of account that you can draw money from on a moments notice. The account may include your savings account, your checking account, as well as your investment account. While checking how much is in each one of these accounts it is important for you to remember that some of these accounts build interest and that some may have expenses attached to them. This must also be factored in to your numbers as it will make a big difference while making your budget, even if it does not seem like it now.
Having your exact monthly income number can be more difficult for some compared to others for many different reasons. Sources of income can vary depending on hours worked, houses sold, sales commissions we will take all of these things in mind. Check out my post on budgeting for monthly, bi-weekly or varied paychecks if you need more help. I know this not an easy process but stick to it, it must be done and you will be so proud of yourself when you complete it.
Calculating hourly wages:
hourly pay X by the number of hours worked each week.
Varied Pay
For those who have varied schedules it is advised that you use the hours from the lowest week instead of the highest because it will prevent you from falling short in the future. Once you have done this you multiply that number by four because there are four weeks in a month. The number you calculate will be your total monthly income, that wasn’t to bad right?
Salary Wages
Use your monthly basis instead of yearly. It is much easier to stick to and create a monthly budget rather than an annual one.
Total yearly income divided by Twelve = total monthly income.
For those who work odd jobs or do not have regular work this process can be a little more difficult. Come up with an average amount of income for the past six months to a year. It is advised that you use a month that you had hard times to allow yourself breathing room while you create your budget.
It is important to factor in all other forms of extra income, no matter how small they maybe. This is because you need to be very precise while figuring out how much money you pull in on a monthly basis. Everything from alimony to child support needs to be considered. Even something as small as cash back on credit card purchases needs to be accounted for in your list of earnings.
The next step to create to a beneficial budget is to make a list of all of your expenses and put them into categories. Sorting your expenses into different categories will help you with determining which expenses can be cut.
Just like when you were making your list of income, you must include all expenses no matter how small you may think they are. The small things add up after a while and before you know it they can overrule your budget.
This step may be a little bit more complicated than the previous one of listing your income. This is due to the fact that you will likely have many more forms or expenses than income. Be patient, this process will take time to complete. It is important that while listing your expenses you are precise, cutting corners will almost surely lead to failure of your budget.
No matter how difficult the process may be or how frustrated you get while doing it, this is an important step, so take a break if you need and come back.
It’s important to see if you are spending more money on a monthly basis than you are bringing in.
While making your list of expenses you will likely be shocked by the final number that you come up with. It is most likely much higher than it needs to be and what you actually thought it was.
Knowing What You Owe Each Month in Debt
You need to determine what you spend each month on debts. This can include items such as car loans, title loans, credit cards, student loans, personal loans, and any other form of debt that you may have. Knowing this will help you better your financial situation. It is important to list down each item and total them all together.
Remember To Include Monthly Insurance Payments:
It is important to make sure that your things are protected in life but at the same time it also important to make sure that you have the money to pay for this protection. If you pay for your insurance quarterly or annually you need to divide the amount of your payment by the appropriate number so you can determine its monthly cost.
Common forms of insurance people have is car insurance and homeowners
Calculate Your Monthly Utility Bills
Utility bills must also be accounted for in your list of expenses. You cannot really figure out an exact number while doing this because your utility bills will be slightly different from month to month, especially during season changes. You need to figure out how much all of your utility bills were for the past three months and then calculate the average bill amount for those three months.
Examples of utility bills are electricity, gas, and phone bills.
Figure Out What You Spend Each Month on Groceries:
We all need to eat so we all have grocery bills. As well, we all know how expensive groceries can be. Even generic brand items seem like they are getting more and more expensive every day. It is extremely important while listing your expenses that you remember to include your average monthly expenses on groceries. Just like with utilities, your monthly grocery expenses will likely differ so you cannot get an exact number but you can get an average. You may find that you need to switch to cheaper brands or lay off of some items for a while. To help cut some of the costs of food and household items I have signed up on sites like Swagbucks.com and by taking surveys and uploading receipts from my regular shopping I am able to earn points that go towards gift cards, like Walmart and Amazon.
Don’t Forget those Special Occasions
This is an expense that very easily gets overlooked. Birthdays or certain holidays can end up being quite expensive, hello Christmas!
Having a budget and planning for these expenses will reduce your need to run out and increase your debt by charging a credit card.
Study Your Previous Cash Withdrawals
You need to make sure that you include all of your cash withdrawals that went to various different things. You need to look at your bank statement and figure out the amount of your withdrawals and then list them down along with the reason the money was spent.
While making your list of monthly expenses you likely made some very shocking discoveries. Were you spending more money each month than you thought? Do not worry if you were because this is quite common. Not that you have come to this realization it is time for you to begin thinking about the changes that need to take place. It can be quite easy to spend money without thinking about it and usually on unnecessary items, a budget will have you stopping to ask yourself
Do I really need that?
You see it you want it you buy it! But do you really need it? Sometimes we shop with our emotions or the thrill of buying something new if you that happens with you check out reflecting on a purchase before you buy.