Good morning everyone!  We are finally getting close to spring and warmer weather.  I don’t know about you but I am excited to be able to open the windows and get back outside again!  Spring always signifies a new beginning to me and it encourages me to get started on the right foot in my life.  I think that is why I felt that this might be the perfect time to write about creating a budget and sticking to it.

This is something that I have struggled with through my entire adult life unfortunately.  I am very fortunate that God blessed me with a husband who is phenomenal with money and doesn’t like to have debt or spend money that often (I guess He knew that I needed someone the complete opposite of me when it came to money!).

I’ve been great at creating budgets, but when it came to sticking to them, I failed time and time again!  This post will go over how to create your own budget as well as give tips and tricks to sticking with it so that you can be successful in accomplishing your financial goals: paying off debt, saving money, or planning for that big purchase in the future!

Creating a Budget You Can Stick To

Find a system that works for you- There are many options for how to set up a budget.  But if your budget is too time-consuming or confusing, the odds are that you won’t stick to it.  Review the below options and choose the one that you feel will work best for you:

• Document everything: you can use Microsoft Excel or Google Sheets to track all of your spending, savings and income if you are more detail-oriented and want to have your hands on all of the information in a flash.
• Track an overview of finances: if you want a system that is less time-consuming on a daily basis and just want to be able to monitor your debits and credits, you may like using a site like Mint.com, moneyright.com, or every dollar: budgeting app from Dave Ramsey.
• Envelope system: this is a very basic system that allows you to be hands-on with your money and keep better control of your spending.  Cash is placed in designated envelopes for each expense and when the cash is gone, the spending stops.
• Printable pages: this is a good mid-level option for most people because it allows you to have all of the details in one page.

Click here to download your free copy of my Budget Worksheet

Determine your total income- You need to know how much money you are working with each month in order to set up an accurate budget.  You want to make sure that you include paychecks, part time work, and any other forms of income that you receive.

Determine your expenses- This should be a complete list of all expenses that you incur throughout the year, not just your monthly living expenses.  Be sure to include expenses such as annual car insurance payments and registration renewal, cost of new eyeglasses, and even gifts for specific events.  For expenses that are not paid monthly, take the last 3 months’ worth of charges and add them together, then divide by 3 to determine the average monthly cost.  Tip: for bills like electric and gas where you may use more during winter or summer months, you may want to use the amount from a higher use month’s bill to ensure that your monthly amount will cover these extremes**

Include discretionary spending- When you are trying to pay off debt and cut your spending, it is normal to feel like you shouldn’t figure in spending money.  However, this can be one of the biggest hurdles to sticking to a budget.  You need to make sure you include some spending money each month, even if it is greatly reduced from what you normally spend.  Maybe you are just going to eat out once a month, or rent a movie from Redbox once a week.  Including these types of expenses into your budget will help you to stay on track and not get frustrated when you “feel the pinch” from cutting back.

Determine your savings- This is another step that most people feel like they aren’t able to follow through with when they are trying to cut costs.  It is very common to hear “I’ll start saving once I pay my debt off”.  The problem is that emergency expenses always seem to pop up when we are trying NOT to spend money, and if you don’t have any savings set aside then this can bring your debt right back up again.  It is suggested that you determine a spend-save ratio for your budget. One example is the 50-30-20 rule, where 50% of your money goes towards your living expenses and fixed bills such as mortgage or rent, car payments and utility costs; 30% goes towards daily costs such as groceries, gas and entertainment; and 20% goes towards paying down debt and saving.  There are three main areas of saving that you can concentrate on in your budget:

1. Emergency Fund: It is recommended to try to save at least a month’s worth of your bills to start, and then slowly increase it to 6 months’ worth and eventually a year’s worth.
2. Retirement Fund: We know that it feels like this is an area we can worry about in the future, but the future always comes faster than expected.  If you don’t start saving for your retirement early on, it can make it much more difficult a task later in life.
3. Major Expenses: This category covers several items such as: vacations, college tuition, a major purchase like new furniture, a car, or a new home.

**Savings Tip:  this tip is so easy to follow and can make such a surprising difference as you try to save money!  When writing checks and debit card charges in your checkbook, try rounding each expense up to the next whole dollar (e.g. $3.25 gets written in as $4.00) and leave the money in your account.  Within just a month or two of following this easy step I have been able to save an extra $25-50!  Another way to easily save is to ask your bank if they offer an option to have $1.00 transferred automatically into your savings account for each check or debit transaction.  These are both extremely easy ways to start saving extra money and pay yourself first!

Like what you’re reading?  Subscribe to my blog at the top of the page on the right side to receive the most up to date posts and information.

Review your budget- Once you have all of the information outlined and you have a firm grasp on where you will be spending your money, try following your new budget for at least 1-2 months.  At the end of this period, you want to review your budget and see what changes may need to be made.  It’s important to remember that your finances are fluid and can easily change.  Life events such as a change in jobs, a move to a new location, or having a child can dramatically affect our spending and make it necessary to adjust your budget.  As you review your progress you will see where adjustments are needed.  Did you wind up using more money on spending than you allotted?  Then you may want to make the necessary changes to allow you more spending money each month.

Make reductions in expenses- You may find that you just can’t meet the expenses with the budget that you have created.  This is when you will want to look for ways to cut your expenses down to allow you to effectively move forward.  Here are a few ideas for how to reduce your expenses:

• Contact your cable, internet, and cell phone companies and see if you are able to reduce your monthly bill. There are usually promotions being offered that you can take advantage of for savings.
• You may also want to consider cutting back the channels you receive, the speed of your internet, or how much data you are using to reduce your plans if there aren’t any promotions going on right now.
• Get on the monthly plan with your utility provider. By signing up for the monthly plan you can help defer the higher costs from winter and summer heating.
• Ask about an auto-payment discount. Some companies will offer discounts each month if you sign up to have your monthly bill paid automatically from your checking account or a credit or debit card.
• Contact your credit card companies and ask for a reduction in interest rates. Some companies are willing to work with you when they know that you are trying hard to get your finances in order so it’s always worth asking if there is anything they can do to help you meet your budget.
• Reduce your entertainment spending. This may involve cutting back how many times you eat out, cut back on the number of trips you make to the store, or rent a movie from Redbox instead of going to the theater. Tip:  look for discounts for your entertainment by using Redbox codes for free movies [give link to pin], bidding on gift cards on eBay at reduced costs, purchasing a Groupon for a fun activity, or shopping on the yard sale sites on Facebook**

 Tips for sticking with it- It is easy to get discouraged or feel like you will never reach those far away goals.  Here are 10 tips to keep you moving forward and motivate you to keep at it:

• Don’t look at how far you still have to go, focus on how far you have already come. Looking back at what you’ve done so far can give you a much better perspective and lift your spirits.
• Make a grocery list before food shopping and stick with it. If it’s not on the list then you don’t need to buy it.
• Meal plan for the week before food shopping. This will help you to know exactly what you have to buy and keep you from spending more than you need to.
• Pack your lunch for work. Even if you don’t pack every day, by packing a couple of meals every week you will be amazed at how much money you can save!
• Write your expenses in your checkbox each day so that you know exactly how much money you have left.
• Don’t carry your credit cards in your wallet so it’s not a temptation to mindlessly purchase things you may not need. If you only have cash or your checkbook, you will more readily reconsider whether you need to make the purchase.
• Sleep on making a purchase. This will allow you to really weigh the purchase against your financial goals of either saving money or paying off debt, which will reduce the number of impulse buys you make.  Think about how many hours it took you to earn that amount of money and you will be better able to make your decision on the purchase.
• Do research before making purchases – comparison shop for the best price as well as the best quality and durability of an item so that you get the most of your money when you finally make that purchase.
• If you are under budget for the month, save the extra money. It will be a normal reaction to think you should treat yourself and spend it, but if you save this money you will feel more accomplished and be motivated to stick with your budget.

I hope this post gave you some great ideas on how to budget your money better and how to achieve your financial goals!  I’d love to hear what has worked for you so please share your successes with us by leaving a comment.  And don’t forget to share this post on social media so your friends and family can take advantage of these tips as well!

Click here to download your free copy of my Budget Worksheet