How to Make a Budget for Beginners
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My number one financial goal for our family is to pay off our six figure student loan debt. Yikes.
It sounds daunting when you put it like that
That’s why I know we need to break down that big goal into smaller, bite sized chunks.
Related Post: How to Set SMART Goals
The first thing to do if you are going to tackle a big financial goal, is to learn how to make a budget.
Budgets are really quite simple, so why do they scare people off?
I always thought I was “budgeting” every month, but I was really just watching our money go out, and categorizing it with my Mint App (which I love).
We were letting our money run the show, instead of making a plan and telling it where to go.
- Why Your Household Needs a Budget
- Simple Tips for a Personal Budget that Works
- How to Have a Budget Meeting with Your Spouse
This worked out okay when we had a steady income stream in residency. We didn’t have a lot of money, but we were paying our bills just fine.
Our method of trying to be frugal without a plan caught up to us, when we started our own practice. All of a sudden, there was more month left than money, and we were struggling BIG TIME.
The reality was that we had absolutely no plan, no budget, and no IDEA what the heck we were doing.
When my husband and I actually sat down together to add up all of our debt from school and starting our medical practice, I kind of wanted to vomit (I might have).
At the same time, it was almost refreshing to finally face the truth. Now that we knew the number, we could make a plan, and make some progress.
The first month that we followed our new budget felt amazing. I wasn’t worried about where our money was going, and it actually felt like we got a raise.
Setbacks certainly have a way of finding us, but we are determined to pay off our student loan debt, and encourage others that it can be done, even if it seems completely hopeless.
The first step to tackling debt is to make a budget, and stick to it!
Love a cute printable to go with your budget?! Me too! Download the Complete Budget Toolkit for free, here.
How to Budget for Beginners in 6 Simple Steps
1. Calculate Your Take Home Monthly Income.
This is what you actually take home after taxes, and any other things (like insurance) that might come out of your paycheck.
It’s surprising how many people don’t know this number. You can’t do a budget, and assign every dollar a place, unless you know exactly what you have to work with.
2. Track Your Spending.
Figure out what the heck you’re spending money on. Where can you make cuts? Do you have subscriptions that you have been paying for that you can get rid of?
Print out your last 3 months of bank statements and start going through. Color code, highlight, write it down. Find out where your money has been going, and what you can do to control it better.
Related: Best Personal Finance Apps
3. Set Financial Goals.
Maybe you’ve never been able to save a dime in your life, and you just want to save $1,000. That’s great! You have to start somewhere.
What are your financial goals for you and your family? Do you have debt that needs to be paid, or are you ready to buy a house?
Related: Should You Pay Off Debt or Save?
Knowing your WHY is so important with any goal, but especially if you’re tackling a monstrous amount of debt.
It’s difficult to stay on track. Setting your intentions and goals is SO important to help you stay motivated.
4. Make a Plan and Stick to it!
AGREE, that this is it. This is our budget. Don’t stray from it because there is an amazing sale, or it’s someone’s birthday, or your friend invited you to girl’s night out.
That’s how it starts. A coffee here, some fast food there, and suddenly you are $100 over budget.
If you are going to make any progress on your financial goals, you need to stick with your plan.
- Dave Ramsey’s Baby Steps for Financial Success
- Recommended Monthly Budget Percentages
- Budget Categories You’re Probably Forgetting!
5. Make Adjustments as Needed.
Don’t give up if you fall off the wagon. I have definitely been there.
One minute you’re trucking along, and feeling like you are FINALLY stable can start making a plan, and then BAM.
It’s like you get knocked out, and you don’t even want to get up. You let your finances spin out of control once again, because you’re too afraid to face reality.
Please, don’t let that stop you. It’s okay to fall down, but get back up!
6. Have Weekly Budget Meetings.
Check in with yourself and your spouse. You can even involve your kids!
Make sure everyone is on track with the plan you decided.
Didn’t do great this week? Try harder next week!
Do a no spend challenge and clean out your pantry instead of grocery shopping to make up for your over budget spending in another area. Readjust, but don’t stop.
You CAN do this. Follow along and I’ll hold you accountable!
Get your budget under control with the complete budget toolkit, sign up for free here.
Do you have a budget or are you just winging it? Face your fears, grab some wine, sit down with hubby, and get after it girl!