How to Budget Easily and Effectively

Why don’t they teach this kind of stuff in high school? If you didn’t learn to budget your money during Mr. Zalyonga’s 7th period Financial Literacy class, never fear! There’s still time to learn this easy and powerful skill. Read on to find out the simple process of creating and sticking to a home-made budget.

Step 1: Project your gross monthly income. Gross income is the money that you make before taxes or anything else gets taken out. You can find this number by looking at a check stub. (For those who have a variable income, you can estimate your monthly intake by taking the average from your last few paychecks.)

Step 2: Spend all your money–theoretically. First, build categories of your largest expenses, i.e. rent/mortage, insurance, utilities, groceries, and personal care. You could do this on paper, on envelopes, in an app like EveryDollar, or in a budget I create for you. Then, based on your past month’s expenses, estimate how much money you will spend in the different areas of your life. Allocate every single dollar of your gross paycheck into a spending category, so you end up with $0.

Note: If you have more money in your paycheck than what you anticipate spending, allocate more within your budget. You can create a savings category for future purchases (called a sinking fund) like a new car or home maintenance.

Step 3: Live your life in accordance with what you’ve planned. Budgeting can take a few months to perfect, so if you notice you’re spending more money on a particular category than you had anticipated, you can always adjust your budget before the next month. (If it’s your first time ever budgeting, you may want to set reminders for yourself. Put your budget in a place you see frequently, and set aside time to log your purchases before the end of the month so you can adjust your spending.

Step 4: Don’t give up. It can be hard to add another thing to your plate when you already feel like you’re drowning. Remember, you have to do a habit for about three months before it really starts to stick. The most important thing is to stay consistent. You can take back control of your money!

Need more support? Sign up for a personalized financial coaching session, where I will offer you a free personalized template for your home budget.

Kate Platt is a freelance writer. Check her out at www.plattliterature.com