- What is a need? That is, what is something that I need in order to survive, if you have a wife and kids like I do, you need to think about their needs. In fact you have to have your spouse with you while you are creating your budget, and both of you must agree on budget or it will fail.
- What is a want? This would be one of those impulse buys. In my case if I see a new game out there for either of the game systems I own, and I purchase the game, that is a want. I didn’t need the game.
- Take cash out for required items like Food. It’s important that food has a priority in your life. I’ve seen people in fact I am one of those people who used to think paying my bills was more of a priority than anything else. I would pay the bills first, and work out some way of getting food on the table later. My thought was “if I don’t pay the bill, I get something turned off.” But none of that is important if I’m no longer around because of poor diet. I’m sure you get the point and the importance of taking cash out to make sure you have spending money for required categories.
- Start a savings account for emergencies.
- It’s your money; know exactly where your money going.
- Money you take out put in a secure place like a safe, and keep money separated by category (Food, Gas, etc) using an envelope system, keep the balance and what you’ve taken out – and what you’ve put into it so you know where you stand without having to sit there and count it each time.
- Keep at it! You will only fail if you choose to. If you don't want to fail at budgeting then you need to work on your budget every single Month, or pay period. Don't give up if you do happen to budget, it's a habit, you will need to keep at it to make it work right. Those who are successful have failed many times before they became successful, just remember it takes work and you will get there just keep at it!
Now that we have a basic understanding of what we should be budgeting. Let me give you the basic categories you should be using in order to create a successful budget. I included the percentage you should set your goals to, however I realize that not everyone is going to be able to make those goals. I remember when I first did my budget and realized that I was paying way more than 15% for my car, SUV, and gas together. I simply made it a goal to pay down my debts in order of credit cards, then auto loans, and when I got to my auto loans I was able to quickly pay them both off, because I wasn’t spending my money paying down credit cards.
- Housing. This will be your Rent or Mortgage payments. This also includes Repairs, and Furniture but those are optional. The main thing you need to make sure is you have a roof over your head. 25-35%
- Food. You must budget monthly, weekly, or bi-weekly [I do it by pay period] on how much you spend on food before your next pay period. This is very important that you take cash out of your bank account every time. If you don’t know how much you spend on average start keeping your receipts, add up the total amount and then use that as an average of what you need to take out on a by paycheck basis. I can’t stress this enough so I’m going to say it again, take the money out of your bank account. Do not pay for food with your debt card or check book. 5-10%
- Transportation. If you don’t plan for how you get around town you’re probably not going to get very far. This includes Auto Loans, Auto Insurance, Gas, Repairs and Bus passes. If you don’t own a car and you take the bus, you should save up for your bus passes. If you do own a car then you will likely have a Loan to pay for, Insurance, and if you want your car to run then you’ll probably need some money for gas. This is another case where I stress the importance of taking out money for gas from your bank account. 10-15%
- Utilities. You have a house you live in, you may need to pay for things like Electricity, Water, and Gas. I also include things like Cell phones, Cable TV, and if they are different Internet provider costs. Not all are needed for everyone, but in my case they are, so I will include them here. 5-10%
- Savings. You will need to have an emergency fund. If you don’t already have one create one today. Depending on how much money you bring in you should have anywhere from 500.00 to 1000.00 in there as a starter. I’ll go over this later on in the Savings section. Since my wife and I are expecting I also have a savings account started to help pay the bills when the baby comes. 5-10%
- Personal. I created a category for personal stuff. This would be in my case spending money for my wife and I, and where we put our gift, and misc spending. My wife and I get a set amount every pay check to be able to spend. This is one of the key things we’ve done that has stopped fights about spending money we don’t have, because we now have that money. In fact this is one of those things that looking back, we have been living paycheck to paycheck, and not once did I think there was any way we could take out extra money to just spend on whatever we wanted to. A side note, this is how I get most of the games I want.
- Recreation. This is another important area. You need to go out and do stuff. For us it’s usually something like going to the movies, or vacation expenses. 5-10%
- Medical. If you’re like me, I have a child that needs medicine every month, not everyone has that need but if you do then you need to plan for it. 5-10%
- Debts. This is where you list credit cards, store cards, personal loans, people you owe money to. 5-10%
- Charity. As you are blessed with money you should help those in need by giving to a charity you believe in. In our case it’s simply church. 10-15%
Now that you have the basics of what you should be budgeting for you need to create your ideal budget. Don’t get frustrated by this as it’s likely to change. You should do some research on what it is you purchase to get an idea of where you may need to start. Look at things you can cut from your life. If you are like I used to be you will find things you could cut, like going out to eat. I have created a website you can sign up for free and track your budget from anywhere in the world. The URL is http://www.budgetcactus.com. Again it’s completely free , gives you a lot of useful information about your budget, it also will give you a 2 week notice of what is up-coming so you have an idea of how much money you’re going to be needing. I also created a DEBT section which you can use to track your progress on debts. I’ve used this to pay off all 7 of my credit cards, and keep track of my status on my other loans. I highly recommend the site to everyone. I do personally answer all support questions.
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