How to Create a Budget

There is nothing more frustrating than getting to the end of the month and wondering where your money went. I want to share with you how to create a budget. And not just any budget but a budget that works. It has to work for you or it is no good. Let me be clear it is not just about learning how to create a budget worksheet. Too many people get lost in the shiny object syndrome. They are looking for that next coolest tool that makes them feel good. When the newness wears off and they are no longer able to keep up with all the features of the software they quit altogether. If you are going to learn how to create a personal budget, then you need something that is both practical to use and easy to keep up with. Below are three steps that can help you get on track.

Start with a simplified budget. Do not worry with trying to get everything right. It is even okay if you budget wrong the first few months. Just start with something simple. Create a budget worksheet that is simple and easy to use. The first one I used look like a typical checkbook register. It helped me because I could easily forecast a few months ahead and see when the money was going to run out. I could also plug in a big spending purchase and see how that affected my financial future. Start simple.

Be willing to adjust to reality. This is a big struggle for many people. They have set in their mind how much gas, food, or entertainment should cost. However, the reality is that their figure is way off. In that case, you are the one that needs to adjust. If gas prices are high and you need a way to commute back and forth to work, you have to fill up your gas tank. You may have to adjust to reality. When it comes to creating a household budget, it is always better to over-estimate your spending categories.

Ditch the cards and go with cash. One of the big “budget busters” for most families is the discretionary spending. It is the everyday spending on little purchases that can get out of control. The biggest culprit is the credit card holder. After all, when you use a credit card it doesn’t really feel like you are using cash. In fact, you are better off walking around with cash. It is psychologically more difficult to spend with real cash. You actually think about how much money you are handing over instead of just swiping a plastic card. It is much easier to budget with cash as well. You can simply tell yourself that when the cash is gone there is to be no more spending until you get paid again. This can help you to save thousands of dollars every year.

Budgeting does not have to be all serious with no fun allowed. Many people have this mindset and that is why they don’t learn how to create a budget in the first place. Budgeting can actually provide you with freedom and fun. If you have $100 on you and you get paid tomorrow. It is much easier to spend that money shopping, then when you blindly handed over a credit card only to regret it later. Living in a budget keeps you from living a life full of regrets.