Whether it’s to take a vacation or splurge on something fun we all wish we had a bit more cash to play with. Before you start digging into the couch cushions looking for spare change, know that you can have the money you seek but it’s going to take some planning and work on your end. Let’s talk about How to Create The Perfect Budget.
How to Create The Perfect Budget
I am about to share the best tips on creating the perfect budget but before I do, you need to know that you have to be committed to doing this. Money won’t magically fall from the tree in your backyard so you have to be proactive with the money you do have. With that being said, here are some tips on how to create the perfect budget.
- Write down expenses – The first rule of fight club (just kidding) but the first rule in creating a budget is to know where your money is going. Write down EVERY SINGLE expense. Including those Netflix fees. Seeing it all out on paper might just be a bit overwhelming but we are going to help fix that!
- Separate your wants and needs – Look I know many of you might disagree that your subscription to HBO every month is want because I get it, Game of Thrones is something I like to watch too, but it isn’t a need. Separate your wants vs your needs into columns on another sheet of paper. Then take a look to see what you can eliminate. Remember even a $5 subscription to US Weekly can free up a lot of your budget over time.
- Decide what is worth keeping – Now you know what you are spending monthly, where it’s going, and the difference between a want and something you need. Obviously, things like food, shelter, clothing, utilities are needs but if there is anything you can remove from the want category – do it to initially free up some money in your budget. Then each month pay on your needs and if there is anything left over use it to pay down debt or stick into savings.
- Do it together – If you are married or have a partner you share expenses with, make a budget together. You need each other now more than ever and you have to come to a middle ground. Talk about expenses, talk about wants and needs, and create the budget together.
- Use Cash – Something that I am passionate about is the Dave Ramsey Financial Peace University program and within that program he teaches how to use cash to stay within your budget. You create an envelope for each expense and put cash to cover that expense inside. It keeps you from over spending, getting into debt, or paying high interest on credit cards. Cash is the best way to create a budget and stick to it – it hurts more to give away cash then it is to charge it.
- Time to save for the wants – So now you have your budget and you are paying for all of your needs. If you are out of debt, have savings built, and are ready to add into some wants into your monthly budget, you can create envelops for those. Look at your monthly budget and see where you might have some spare money to play with. Then, decide what you want to use it on. Maybe it’s a monthly pedicure or date night out to a fancy restaurant, whatever it is, reward yourself for all of your hard work. You can also start saving the change you get from using all that cash. Put it into a jar with a fun label on it to work towards adding something fun and special to your budget.
- Reassess your budget often – Creating a budget is the easiest part of this entire thing but maintaining it is another story. You can’t just create a budget once and then never look back. Expenses often change from month-to-month (unexpected illnesses, changes in work hours, increase in hourly rate, etc.) so you have to adjust your budget accordingly. I usually look at my budget once a month and if there is something I see I can’t afford or extra money left over, then I know what to do. Just think of your budget like a baby you have to constantly care for.
Now you know how to create the perfect budget. Be proactive in the way you handle money and always know where your money goes. You will be on your way to having extra cash in your hands each month in no time!