3 Steps to Create a Simple Budget

Understanding standing your spending and saving is the first real step to getting yourself out of a deficit each month! Let’s face it a lot of our worries come from the fact we enjoy spending our money and spend very little time actually thinking about how hard we worked to earn it. When I first started to help my friend I made him get all his credit cards, bank, and loan statements in one massive pile to tackle the task of understanding where his money is going!

Step 1: Find out where all that money is going

Track Your Spending

This may sound easy, but don’t underestimate where all your money goes in a day because we usually earn a livable wage, but blow it quickly over the weekend or spending it on certain days when we lose sight on how much time we used up to get it! Remember that the most important thing is to consider every single purchase you have made. I want you to include every small payment and every penny in your calculation. Otherwise, we aren’t going to have the accuracy we want!

Step 2: Make a list of where your money goes

Categorize where you are spending 

Break down your expenses into blocks where you can easily find out where all your money goes in a month. You can make it as simple or as complicated as you like, but I want you to think that if you make the list more detailed and specific the greater the potential for you to truly find out where your money goes in a month and what you are spending on. Make it simple or complicated, but you will find out the most important thing of all. Are you spending more than you are earning

Step 3: Make it realistic and budget accordingly 

Build the Budget

Collecting all that raw data has really shown you where all your money is going and now its time to really build that budget that you can follow. Here is the trick, I don’t want you to go cold turkey on me. Build a realistic budget that you can create and reinforce a good habit of saving or paying down your debt. This is a marathon, not a sprint. Don’t squeeze every penny you earn into a budget that isn’t going to work. The best way to do it calculate your disposable income and take 10% of it as start and gradually increase it to some number that you are comfortable to put away without touching or feeling like your social life is in ruins because you went over budget and cant go out!

Keep Life Simple!

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