When my husband and I got engaged, we of course started planning our wedding, but the first thing we did was we set a budget. This was an amount of money that we set aside and were allowed to spend on our wedding. There were many different aspects of what we needed to pay for and we wrote it all out, down to the flower petals. A budget may seem scary, but it doesn’t have to be. Budgeting gives you the freedom to spend money within reason.
Make sure you are setting your budget including anyone who needs to know about it. If you share finances with anyone, they need to be part of the budget planning process. Set down with a computer, paper, calculator and some time to plan for the future!
If you’re struggling with your finances, but you don’t know where to start, keep reading to learn how to make a budget. Also check out my post 19 tips to save money.
Disclaimer: I am not a financial specialist.
Have A Goal
First you need to have a goal. If you write down a bunch of numbers with no reason, then what’s the point? Decide why you want to create a budget. Do you want to save for vacation, for a house? Are you always spending more than you have? Do you want to save for retirement? Once you have your goal set, move on to seeing what you are currently spending.
See Where Your Money Is Going
The second thing you have to do when you want to set up a budget is to see where you are spending. Sit down with a piece of paper and pencil and start writing out everything that you are spending money on. Starting with the biggest expenses is best. Don’t forget about the little things.
See Where Your Money Should Be Going
Once you know where your money is going, you need to take a look at it and see if that’s where your money should be going. For us, the first thing we budget is tithing. 10% of our income before taxes goes to our church.
Your biggest expense should be your home. The roof that is over your head should be no more than 33% of your budget. So if you make $3000 per month, your rent or mortgage should be about $1000 and no expense should be bigger than that. Along with your home expense is utilities- that is necessary utilities such as water, electric, and heating. This does not include phones, or internet, those are not essential and those will come in later on.
The next necessity is food. You have to have money set aside to purchase food. After food you can choose what is the next most essential thing. Can you not live without your phone or the internet? (For some this is how they have work.) Do you need to have a car with insurance and pay for gas?
Related: Two Weeks Of Cheap Meals Under $50
For us, after food comes transportation, including insurance and gas. This is not the next most expensive thing, just the next most essential. Then phones and internet, followed by all of our subscriptions and fun money at the very end.
Cut Back
Once you see where your money should be going, think of all the ways that you can cut back. Can you cancel your Netflix subscription? Are you able to turn down your thermostat at night, or when you leave the house? Can you reduce your new clothing purchases?
This is the hardest step. It can be so challenging to take a step back from what is comfortable and see what you can do without. Here are some ideas on how you can cut back on spending:
- Turn out the lights when you leave a room
- Unplug unused electronics
- Change light bulbs to LED
- Keep your freezer full
- Don’t run the dishwasher or washing machine until its full
- Seal your home better
- Tune up the furnace
- Change the filters
- Let natural sunlight warm your home or use curtains to keep the heat in
- Turn down the heat when you are gone from the house, or asleep
- Don’t use fan vents
- Cook or bake to warm the home
- Use more blankets and sweatshirts and keep the thermostat at a lower temperature
- Lower the hot water temperature
- Take shorter showers
- If it’s yellow let it mellow, if it’s brown flush it down
- Make sure there’s no leaks
- Make your toilets low flow
- Get efficient shower heads
- Collect rainwater
- Use faucet aerators
- Meal plan
- Don’t eat out or eat out less
- Don’t buy new clothes
- Cancel subscriptions & memberships
- Stop streaming services
- Cancel cable
- Have a no spend month or week
- Switch your phone plan
- And one just for Alaskans- get a timer for plugging in your car.
If you need some more tips on how to save money, check out my post 19 money saving tips.
Related: No Spend Challenge
Set Your Budget And Stick To It
Once you have decided where you will cut back, write out where ALL of your money is going. Don’t just write out the things that you have to spend money on, make sure to include savings, and spending money. All of your income should be accounted for, not a penny more or a penny less.
Save $1000
This is a great starting point for savings. If you don’t have $1000 dollars saved for emergencies, an emergency can be even scarier than it has to be. Make sure you start setting money away in case disaster strikes.
If You Are In Debt
If you have debt, check out this website. Get on the 7 step plan to get rid of debt, and build wealth. Getting out of debt is so important to financial freedom. You will feel so much better once all of your money is yours and you are not subject to a lender.
