A Budget is an estimation of revenue and expenses over a specified future period of time; it is compiled and re-evaluated on a periodic basis. Budgets can be made for a person, a family, a group of people, a business, a government, a country, a multinational organization or just about anything else that makes and spends money. Among companies and organizations, a budget is an internal tool used by management and is often not required for reporting by external parties.
Today we will give a high overview of what budgeting is, and how it looks. Budgeting can be very challenging, and it requires a lot of discipline. Budgeting is more than just saving your money. Saving your money is just as important, and a prerequisite to Budgeting.
People who are supporting themselves for the first time create budgets to make sure they’re properly allocating their first paychecks among emergency savings, retirement savings, student loan repayments, rent and utilities, and rewards for their hard work like new gadgets and nights on the town. Young couples trying to figure out how to afford a wedding, or newlyweds wondering how to fit the expense of buying a house or having a child into their monthly cash flow, are also likely to make budgets.
Having A Budget Can:
- Make long- and short-term projections about your financial situation.
- Avert a financial crisis.
- Get the most from your money.
- Plan for major life changes.
- Achieve peace of mind.
- Live the life you want.
You have to be organized while Budgeting. First thing to do is figure out how you will document your Budget. I speak often about being digital, so my first recommendation is downloading some sort of app on your phone or tablet. If that is not your thing at the moment, make a spreadsheet or revert back to good on pen and paper! Now that we have that out of the way lets talk about how to set up your Budget.
How To Set Up A Budget:
- Keep Track of Every Expense, Including the Small Ones – You’ll want to save your receipts, put all your purchases on the same debit or credit card to make record keeping easy.
- Update Your Budget Daily – Tracking your money this way will take minimal time, and you’ll be less likely to forget something than if you wait until the end of the month to categorize everything.
- Use Accurate Descriptions – Write down your expenses by what they are as well as where you purchased them so you’ll be able to figure out later how much you spent in particular categories.
- Budget by the Month, Not by the Paycheck – Budgeting monthly forces you to think slightly longer-term than your bimonthly paycheck, but not so long-term that you’re likely to get derailed.
- Plan for Occasional Expenses – Budget for expenses that only happen a few times a year, such as gifts, car insurance (if you pay every six months or once a year) and doctor visits.
I always say continue to treat yourself for a job well done. It’s ok to make a purchase solely for yourself while Budgeting. You have to have some sort of fun! 😃
💡If you need help getting your Budget started check out, Budgeting With Fancy Webinar.