I thought I had a budget before. It was a sad appropriation of ‘CAN NOT’ in my head. It was a round about number, it was a cursed word that said “No. Not it the budget.”
Let me tell you what a budget really is.
First of all, every month is different. How could it not be? Every month is different and brings its own challenges and celebrations.
And your income is maybe not exact every month. If you are not on a salary, your pay may fluctuate. If you had a rough month, do you have a plan in place to duck and weave? You can’t keep spending the same in a tight month as you do in a banner month.
If you get a bonus, be sure you are using it appropriately to fund YOUR goals, YOUR life’s plans and purposes.
Secondly, your budget can say “Yes”, as well. Set up your Budget to pay yourself first.
List your income
Subtract from the very top pay yourself first.
This could mean
- Retirement automatic withdraws
- Funding your dream list savings
- Paying off your debt
This is what I refer to as reverse budgeting. I hit these goals first. Then I do my best to stay within my budgeted dollar amount categories. If I spend too much on eating out, it may mean less grocery or spending next month, but it won’t mean that I don’t do what I have decided is the most important to me. I prioritize my income.
This takes some finessing and you will suck at it at first. That’s okay. Just do it again next month.
First things first, set up your budgeting categories. I have ours set up to put the goals first (reverse budgeting), then the NEEDS, then I filter into the other categories. Most of the things in the budget are needs, or they at least FEEL like essentials, but I try to list them in a priority order. My order will be different than your priority order and that’s how it should be. Our life is not the same, our priorities may not be the same. My debt is paid off, but when I was rolling my snowball, DEBT would have been the goal at the top of the page, instead of my dream list savings.
Next, find a software system you can deal with. I love YNAB. The classic version. I don’t love the monthly subscription fee of the new version, but many people do because of the phone app.
My credit union also has a budgeting feature, so does Dave Ramsey’s Every Dollar. You can check out Mint.com, there’s literally hundreds of options to choose from.
What I love about YNAB, and why I will always lean to them for recommendations first, this software will actually teach you sound budgeting techniques as you go. There is a built in overflow category that will help you get one month ahead of your bills if you use it properly. They have a very active community, a prolific blog, and owner/founder Jesse does weekly whiteboard Wednesdays to teach you a thing or two. There are live web sessions you can sign up for to teach you how to use the software fully, and the transactions can be automatically categorized and downloaded for you. Sometimes the best option is the one that you know you will actually use on a continued basis, so keep that in mind as you get set up.
Take advantage of the free trial versions of the different options available as you get setup. If you bump into a non-negotiable, take your categories and what you have learned from one budgeting software and bring it with you to the next one! This budgeting thing is going to be a journey, so pack you bags for the long haul.
My goal is to teach you how to do it in 15 minutes or less, weekly, so that it is painless and you see major progress in your cash flow.
Set up Budget categories. Get started with this FREE download. BudgetCategories-AofLM
Choose a budgeting software to get started with.
Email me with any questions. I’d love to hop on a skype coffee session with you to get you started! My goal is to help 10 people this month set up a new budget system that works for them, let that be YOU.