Tips on How to Create A Budget

Everyone knows they need a budget, but many people just don’t know where to start.

Track Your Spending

Gone are the days of pencils and ledgers and even paper checkbook registers.  Free software or apps will make it simple and painless to track your spending.  Be sure to enter each debit as it happens so you don’t forget where your money has gone.  

Pro Tip:  Use detailed categories when entering your expenditures so that evaluating your spending habits is easier.

Evaluate Your Spending

At the end of a full month of tracking your spending, take the time to evaluate where your money has gone.  Most software and apps will generate a report or perhaps even a visual chart. Take a look at where your money has been spent.  Does it compare to national averages? Does it reflect your personal goals including how you spend your leisure time or what you’d like to give to charity or place in a savings account?

Pro Tip:  Evaluating your spending honestly is the biggest hurdle.  It’s the key to creating a budget!

Save Money by Shopping Online

Going out to the store can be an exhilarating experience, but many stores and places of business won’t hesitate to drain all the money out of your wallet. You can avoid this by shopping online, where prices are less “volatile” and deals are available everywhere.

Certain websites are designed to save you money by finding you the best coupons for shopping sites. And if you want to take your savings even further, you can use something like a VPN or proxy to trick a website into giving you a better price.

Pro Tip: Make the move to online shopping. With online shopping, you can find great deals fast and use workarounds to get better prices.

Lay Out a Plan

A budget is exactly that: a plan for how you will spend your money.  Now that you’ve evaluated your spending history, you can compare this to your financial goals  If you haven’t been giving to charity as much as you’d like, make those donations first each pay period or even set up an automatic withdrawal.  Some changes may need to happen gradually. For instance, if you’re accustomed to spending more than you realized on dining out, reduce the frequency of those meals while remembering to add to your grocery budget for the additional meals at home.

Pro Tip:  Keep your grocery budget (food and drinks) and your non-grocery budget (laundry detergent, paper products, etc.) as separate budgetary items.

Implement Your Plan

Each pay period, be sure that your budget matches your needs and goals.  Pay your bills as soon as your paycheck is credited to your bank account.  Don’t forget to budget some “fun money”, even if it’s as little as five dollars.  If you need cash, place it in an envelope earmarked for that specific purpose and don’t dip into it for anything else!

Pro Tip:  If you do the majority of your shopping at one store (such as Walmart or Target), load that amount onto a store card.  You won’t be tempted to overspend and you can carry over the extra each shopping trip.

Now that you’ve learned how to create a budget, follow it!