Learning how to budget is an ongoing process but is an essential part if you want to set you and your family up for success. I have been budgeting since 2011 when I got married while in college. Getting married while I was still in school seemed like a great idea at the time, and though I don't regret it, we definitely struggled financially in the first years compared to my friends who waited until they both had stable jobs.
To clarify, we struggled with income, but we did not struggle with increasing our debt. The reason being was because we created and stuck to a budget.
Though our budget has changed through the years as our income has increased, our methods for staying out of debt have not. Going into a new year, we wanted to equip you with tools to budget your finances so you can experience a positive 2017, and you will have more wiggle room for adventure instead of wondering where your money has gone at the end of the month.
The infographic below talks about being financially fit and the effort that this type of fitness requires.
One of the first things to decide is how you want to budget your money. Are you paid monthly, bi-weekly, or given a salary with an additional commission? Plan a budget that fits the time you receive payments. For example, my husband is the main breadwinner, so our timeline for our budget begins every two weeks.
Next, you need to organize your bills by recurring and non-recurring payments. Write down when a recurring payment is due and the amount of each one. For the non-recurring payments, write down an average of what you spend (groceries, toiletries, clothing, gas, home and car maintenance etc.). Be realistic.
The biggest tool that has helped us stay on track financially is the use of cash in an envelope system. Financial Expert Dave Ramsey recommends the envelope system so you can visually see your money and take what you need from the correct category instead of a large pot. We label our envelopes and place the amount of money inside according to our needs. It may take a month or two to get an idea how much each envelope realistically needs without reaching into your bank account for more, but you'll eventually figure out what amount works best.
The video below explains more about the recommended envelope system:
After creating a budget, we want to encourage you to start saving for an emergency fund. Things happen that you can't plan for, so saving three months salary will be key to relieve stress this year when unexpected payments arise!
If you find yourself with money left over after budgeting and saving for your emergency fund, create envelopes to help you save for trips, down payments, or a luxury item.
There are many tools out there to help you get started, so check out the recommended tools below, and start your 2017 budget right away!
Best Budgeting Resources:
Tell us in the comments how you plan to take control over your money this year instead of letting your money control you!