Simplified budgeting if you’ve never budgeted before
Budgeting does not have to be complicated; we want to show you how to simplify your budget even if you’ve never budgeted before.
When it comes to managing your money, for some of us this can be a real challenge as there always seems to be a bill or unexpected expense that comes up and we can feel overwhelmed with trying to get it all under control. Or we have not had to budget before and we are now in a position where we need to now learn to manage our own money and this can be hard to get our heads around.
Below we have broken down how to budget your money into 5 easy steps to put you on track to managing and simplifying your budget. Be able to save money for those unexpected expenses and learn some great tips to paying off your bills before you even get the bill in the post.
Start a budget in 5 easy steps
Step 1: Financial Goal.
Step 2: Learn Where Your Money Goes
Step 3: Adjust Your Expenses
Step 4: Separate Bank Accounts
Step 5: Follow Through.
Step One – Financial Goals.
When it comes to budgeting and being able to stay with it, just like anything in life you need to have a reason to do it and to keep doing it.
The best way to make it a simple process, is to set one or two finance goals , don’t over do it in the beginning start small and once it becomes habit and an easy process then look to add more goals in.
So, what are your financial goals, this can be from
- getting out of debt
- paying of the credit card
- getting a new car
- down deposit for that new home.
No matter what the goal; set one or two that are achievable for you and that’s it’s something you really want to be able to achieve.
Okay, now you have your goals set that’s step one completed. Now you have a purpose in why you need to budget and keep to that budget.
Step Two – Learn Where Your Money Goes
This has to be one of the most important steps to learning how to budget and take control of your money. If you have no idea where your money is going then you can’t get a handle on it and will never be able to have the financial freedom we would love to have.
So, easy to do get out or print off you last 12 months of bank statements. And the reason for printing is it makes it easy to see and have on hand to see exactly where you’re spending your money. If you have a few different accounts then print them of too.
Now, start and write down month by month where you’re spending your money.
Once you have a clear picture of this then you can also see where you can cut back on to. But more importantly you can also see how much per month you need to pay off all your bills and other expenses.
Now you’ll want to write down your income every Month.
Compare your income per month with your expenses per month. This should be the same or less than your monthly income.
This is an example of what it may look like.
|Total for the month of January – $4685|
|Income||$3000 ($1500 a fortnight)|
So, from the example above you can see that the money for expenses is above the amount of income coming in for the month. But don’t worry this is not a big deal cos we will show you how to manage this so that it drops the amount of money on bills to under what you have coming in for the month.
This is just step two of the 5 step process. Just make sure you do this for each month and keep the example in mind as we go through the next steps.
This process will also work for those that have different amount incomes each month. So, it is a simple budget system that will work for anyone and any income.
Step Three – Adjusting your Expenses
Now we start to break it all down to manageable parts and how to get your budget to work for you. Start by budgeting on a monthly basis.
This is really helpful if you don’t earn a steady income month after month, told you it would work for any income.
So now that you have had a look back over the last 12 to 2 years and written down what your average income is per month.
|Month||Year 2018||Year 2019|
Now write down when your bills and expenses are due per month.
|Bills||Amount per month||Month Due|
And so on until you have all your bills and expenses written down.
What you want to see if how much per month you need to pay out and how much is coming in.
Now that you can clearly see this. Start to look at on the months where you have more income coming in that you mark down how much you can move over to another month to ensure that you cover those bills and expenses that may be over the incoming in for that month.
If you don’t get a regular income each month then do this process when your money goes into your account that way you will know how much you can put to each expense.
Step Four – Separate Bank accounts
This step is what is going to make it all work for you. By having separate bank accounts (and we have spoken about it here) allows you to put money away for when the bills come in or that extra expenses come up like birthdays or Christmas.
Being able to put the money aside each month to pay the bills will mean that you never become short and will always have that money there when needed. Now this can take a little time to get to work for you as it can be a little tricky to keep paying the bills as you put this in place.
But you already know when the bills are due and what income you have each month so work with it and slowly start to put that money aside each month and you will have this system working for you in no time at all.
Where possible try to put a small amount away for that unexpected expenses that may come up before your next pay.
Step Five – Consistency
To make this work for you and I can tell you that this will work for you no matter your income or expenses. It just about working a little smarter to get your money to work for you not against you. Don’t fear money and especially don’t worry about those bills, with this system in place it will no longer keep you awake and no longer be a focus of your time.
All you need to do is keep consistent with applying this each month and before you know it this will be a habit that just happens and is not something you think about anymore. Life will become more enjoyable.
Plus, you will start to see that you have a little money left over each month to put aside for savings, like that holiday for the family or that new car.
These things that you put down as your goals at the start will start to become reality and that is when you have financial freedom, nice right.
- How to save money – Food Budget
A great way to save money on your food budget and have a little extra for those other things and your goals is to take stock of what you have in your cupboards, fridge and freezer already. Plan out the meals each week and only buy what you need to make those meals.
By doing this your food budget will shrink, plus have your pantry staples stocked and your be surprises the different and cheap meals that you can make. We have a post here that can help you get started with this.
- Pay off that Electricity bills
Start paying of your electricity bill or any utility bill each week with a small amount to knock down your quarter bill
Set up payment plans where possible, allows you to pay a small amount each week to the larger bill allowing you to have more control over your money and to help you with budgeting your finances and being able to save as well.
- Tips – don’t spend what you don’t have
Avoid after-pay or credit cards, this will only lead to more stress around your budget.
Don’t fear money; look at it in a positive way not a chore or in fear. Knowing what’s coming in and out will help you take control and not have those money fears.
Set aside savings, even $5 will add up and have you achieving your goals and that financial freedom you really want.
You don’t need to earn more money to have a good life and the things you want you just need to know how to manage the money you have and not fear it.
If your looking for a great budget template then we have one for you as well, check it out over in our shop here.