How To Create a Budget and Stick To It
The first step to becoming debt free is creating a budget. If you don’t figure out where to send your money, you’ll never get anywhere. So, no matter how you decide to do it, a budget is key! Here is how we create our monthly budget at home:
Step 1: Income (after tax)
Figure out what your income is after taxes. This is what you have to work with for the month. If you are a two income family, add both together. Ours is a little more difficult since we earn solely on commission. If you are a commission-based family, my advice is to make your budget based on the lowest amount you made in one month this year. For example, let’s say your worst month this year was March. Make your budget based off of your income from March. This way, your budget will be safe from any “low” months. Plus, whatever you have left over can go straight to debt!
Step 2: Fixed Expenses
A fixed expense is anything you pay that doesn’t change in amount. Ex: Mortgage/rent, utilities, loan/credit card, insurance, retirement. Write these down on your worksheet.
Step 3: Variable Expenses
A variable expense is anything that changes from month to month. Ex: groceries, restaurants, entertainment, clothing/shopping, gym, other. Include any and all expenses in this category.
Step 4: What’s left?
After everything is accounted for, find out what is left over. This is what should be applied to any outstanding debts you may have. If you don’t already have an emergency fund in place, you need to get that done FIRST! To find out how to start your debt-free journey, click here!
Tips to stick to your budget:
- Complete your budget PRIOR to the month beginning. You’ll feel like you are organized and will be more likely to stick to it!
- Print it out! I am a hands-on person who needs physical paper to stick to something!
- Tape it to your fridge, or anywhere that you go often. It’s proven that if something is in front of you, you’re going to look at it and are more likely to do it! Don’t tuck it away in a drawer, it will be forgotten.
- Involve your family! If everyone is on board, you’ll be much more likely to stick to your budget. Accountability is a great motivator!
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Get your FREE *editable* budget worksheet here!
(Must have a GMAIL account to edit.)
Let us know in the comments how you like your new budget!
Here are some other options for budget workbooks: