Beginner’s Guide to Budgeting
Budgeting is the first step for anyone struggling with their finances. In this beginner’s guide to budgeting, you’ll learn simple steps to create a budget that works for you and get on the road to financial security.
Now more than ever, money and finances are a significant concern for many of us. With the cost of groceries and goods skyrocketing – while incomes remain stagnant -many who were once comfortable are now facing tough choices just to afford necessities. As a single mom with a limited income for most of my adult life, I have learned how to thrive on a small budget. Establishing a budget is the first step to surviving and thriving in these uncertain economic times. Today, I’m excited to share my beginner’s guide to budgeting to help you start your journey toward financial discipline and freedom.
A Budget is Telling Your Money Where to Go
Many people resist the idea of budgeting because it feels restrictive. However, budgeting doesn’t mean you can’t enjoy your money; it simply means you’re making a plan for how to spend it wisely. As the famous quote by John Maxwell states, “A budget is telling your money where to go instead of wondering where it went.” With a budget, you gain control over your finances and can allocate funds toward the things that truly matter to you.
The reality is that you have a finite amount of income, and if you don’t learn to live within your means, you’ll likely sink further into debt. This growing debt can strangle your financial freedom and limit your ability to make choices. Creating a simple monthly budget is the first step to regaining control over your finances.
Beginner’s Guide to Budgeting
A budget can be as straightforward as jotting down your expenses on a piece of notebook paper. Alternatively, you can create an Excel spreadsheet, use a planner, or utilize a printable format. To help you get started, I’m including a free printable Beginner’s Guide to Budgeting in this post, but feel free to customize it to suit your needs. The key is to write everything down BEFORE you spend the money, which will help you stay on track and manage your finances more effectively.
Start by writing down everything you spend money on over the course of a month. This includes everything from your monthly bills, groceries, utilities, and gas for your vehicle to those sneaky little streaming service subscriptions. To make sure you don’t miss anything, it’s a good idea to take a peek through your bank statement and see where your money has been flowing.
Once you have all your expenses written down, take a moment to evaluate how much you need to budget for each category. It can feel overwhelming at first, but breaking it down can make it a lot easier. Think about when your bills are due, and consider which paychecks will cover which expenses. This way, you can plan ahead and avoid any last-minute scrambles to pay your bills.
What if There Isn’t Enough Money?
If you find that you’re not making enough money to cover all your expenses, the first step is to prioritize essential needs. Focus on keeping a roof over your head and ensuring that your lights and water remain on. These basic necessities are crucial for your day-to-day life and should take precedence over other expenses. While groceries are certainly important, there are ways to scale back without sacrificing meals. Planning ahead and opting for cost-effective ingredients like rice and beans can help you create nutritious meals on a tight budget.
Next, take a close look at your discretionary spending and consider canceling any unnecessary streaming services and subscriptions. These costs can add up quickly, and cutting them can free up valuable funds. Additionally, shopping around for more affordable options on essentials like car insurance and phone plans can lead to significant savings. For example, I managed to cut my cell phone bill from $200 per month to less than $50 simply by switching to Visible. Small changes like these can make a big difference in your monthly budget and help you regain control of your finances during tough times.
Prioritizing Money Goals
Why do you want to get on a budget? Understanding your motivation is crucial as it will shape your approach to managing your finances. Are you trying to save for a major purchase, like a home or a vacation? Perhaps you want to pay down debt to achieve financial freedom, or maybe you’re looking to get a clearer view of your money goals so you can allocate your funds accordingly.
If you’re not quite sure what your financial goals should be, let me offer a few suggestions to get you started. First and foremost, it’s important to establish an emergency fund. While many people aim for around $1,000, this amount can vary based on your individual situation and circumstances. The key is to have enough money set aside to handle life’s unexpected emergencies – like car repairs or a doctor visit – without having to dip deeper into debt.
Once you have your emergency fund in place, another worthy goal is to focus on paying down debt. Tackling your debt not only reduces financial stress but also frees up money you would otherwise be spending on monthly payments. This extra cash can then be redirected toward investments or improving your quality of life. There are several effective strategies for managing debt, such as the debt snowball method – where you pay off the smallest debts first to gain momentum – or debt consolidation, which combines multiple debts into a single payment with potentially a lower interest rate.
Give it 3 Months
The early stages of budgeting can definitely be frustrating. Just when you think you’ve got everything figured out, an unexpected expense you forgot about suddenly crops up, throwing your plan off balance. Or maybe you have a particularly tough day and end up splurging on something you didn’t budget for. It’s easy to feel discouraged and want to give up after encountering these bumps in the road.
However, it’s important to remember that your budgeting journey will likely be a bit rocky for the first three months. Adjusting to new financial habits takes time, and it’s completely normal to experience setbacks along the way. Instead of seeing these challenges as failures, view them as learning opportunities. Each misstep helps you refine your budget and gain a better understanding of your spending patterns. With patience and persistence, you’ll soon find your rhythm, and I promise that around that 3-month mark, you will start to see the changes a budget can make in your life.
Embarking on your budgeting journey can be challenging, but with the right mindset and tools, you can achieve financial control. This beginner’s guide to budgeting provides you with steps to prioritize your expenses, set clear goals, and make informed financial decisions. Remember, budgeting is not just about limiting your spending – it’s about empowering yourself to allocate your money in a way that reflects your values and aspirations. Stay committed to the process, and you’ll be well on your way to financial freedom!
