For many, creating a budget is high on their “not to do” list!    It is a reminder that you should be responsible, that you should live within your means, that you should be paying down debt, that you should be in a better place.  But what if instead you looked at it as a positive?   A way to build wealth, get your finances under control, improve your current situation, plan for your future, and get real about where your money is going every month.  

Creating a budget is a skill that many of us do over and over again throughout our life.    I think of budget planning like dieting… it is hard to start the process, but once you start seeing the benefits you want to keep going.   Like dieting, if you are too strict or too hard on yourself, you are going to give up quickly.    It’s best to start simply and to know that an occasional splurge is okay. Remember your goal in dieting is to be eating healthy rather than lifelong dieting.   Likewise, look to “spend less than you earn” and bank the difference for long-term financial health.  

In creating your budget, list your income at the top and then your expenses at the bottom.  Pull your pay stubs, year end statements, and look through your monthly bills and checking account to gather your estimated monthly amounts.    Below is a sample budget with several categories.   You may need to add or subtract some of your own.   Set this budget up on a spreadsheet and save it to your master finance file.  Or just write it out on a sheet of paper.   Place copy of the completed budget in your financial binder behind tab 2.

Categorize your budget as above and pay attention to what you can change.   If you have too many expenses, you can either bring in more income or cut out some expenses.   Both the total income and the total expenses amounts need to match.  In this example, the income is $4,700 each month and the expenses match at $4,700 per month.   Did it automatically work like that?  No, I adjusted the category amounts several times to make the expenses match the income.   You cannot allocate more money than you make.    I’ll write more about debt next month, but for now stretch yourself to make additional payments to pay off your debt.  The faster you pay off debt, the faster you can build wealth.  

If you do not have an emergency savings, take a look at this post and get started today.   If you already have $1,500 in your emergency savings, shift this money down to your monthly debt to pay off outstanding debt quicker.   

End your budget stress today by creating a different 6 letter focus word and begin to create your best financial F-U-T-U-R-E.