Do you have any idea how much your bills and expenses are? Have you neglected to set up a simple budget? (Maybe you don’t know how to budget?) Do you feel there may be a lot more you could be doing with your money? Are you possibly even racking up credit card debt?
This was me up until a couple of years ago. I just spent whatever I needed to spend and I didn’t get bogged down with boring things like bill-paying, budgets or balancing my checkbook. Thankfully, my husband is a financial dude, and he did most of that for the both of us.
However… there does come a point in our lives when we may realize that our habits are not getting us where we would like to go.
Eventually, I had to face my debt and the bad habits that had gotten me there. I was frustrated with my lack of control with spending, and frustrated with the amount of money we had to pay each month onto credit card debt.
One day, I woke up and realized that being stuck in a debt-payoff cycle was not what I wanted for my life!
Is this you too? I hope so! Because I could really use some company with this!
I’ve been working on my spending habits and working to pay off my debt for the last 18 months. I’ll just tell ya – it is really hard sometimes.
But let me tell you something else – it’s totally worth it!
If you are feeling the stress and pressure of being in debt, or just feeling like your money is constantly flying out the window, then read on!
I’m going to share with you the first step to a reformed financial life – setting up a simple budget!
When you’re ready to hear my surprising trick to stay on a budget, read this post!
The first question is…
Where to Keep Your Budget:
I know you don’t want anything complicated! You just need to get it organized. There are basically three options:
Option 1: Pen and Paper
This includes lined notebook paper, printed out calendar pages, or anything that you must use a pencil to write on and a calculator (or your head) to keep a running total.
The Pros: It’s cheap to maintain and quick to get started. If you like to see your budget right in front of you, this gives you that satisfaction.
The Cons: You will have to rewrite everything each month, and it’s a pain to erase/update/change things. You also have to calculate everything manually, so there is room for error, and you won’t be able to see at-a-glance how much you have left to spend. And the worst part for me is that you can’t have it with you at all times.
Option 2: Smartphone App
There are a plethora of choices out there, and all of them have different bells and whistles, as well as different formats and usability.
The Pros: You can keep your budget right with you at all times on your phone, and many apps have desktop websites as well. Many apps allow you to share info with your spouse. You may be able to connect it with your bank accounts so that expenses are plugged in automatically (though this option usually has a charge).
The Cons: Many apps have a charge, or once you start using it (read: you spent a lot of time setting it up) you realize that the features you want require a ‘premium’ membership. If the apps are free, they may bombard you with ads. You also may not be able to find an app that does exactly what you need it to do (this is the case with me!). And finally, you may not be able to see your month’s expenses at a glance (like you would on paper).
Option 3: Google Sheet
A spreadsheet has opportunities for built-in formulas where you can add information in a number of ways and customize it for your purpose.
The Pros: Google Sheets stores information automatically online, so you can access it on your smartphone or at any computer or device, and it saves changes automatically. You can customize it to do whatever you want and look the way you want, and include as many categories as you want. You can also choose to print it off if you preferred to see it in print!
The Cons: You cannot plug in expenses from your bank accounts, and you need to know some basic spreadsheet functions to use it (but I’ll help you with that!).
If you want to know more about using a Google Sheet to keep a budget, read this post.
You can download my FREE Google Sheet called The Simple Budget by clicking here!
How to Set up Your Budget:
Okay, so once you’ve decided where to keep your budget, it’s time to plug in all the numbers!
Check out your paper bills, your online accounts, check registers, or credit card statements to find all of the info in the next three steps. If you just can’t find the information (and your husband doesn’t know either), call the company and ask!
Step 1: Plug in Your Income
Include all regular income.
- Your income
- Your husband’s income
- Other sources of income (side hustles, stipends, commissions, etc.)
Step 2: Plug in Your Monthly Bills
This should only include repeated monthly expenses that occur after you get your check. So don’t include retirement or tax deductions that happen before you get your check.
- Home loan or rent
- Homeowner’s insurance and escrow (if separate from your loan payment)
- HOA dues
- Home security
- Utilities: electric, gas, water, sewer, trash
- Auto loan or lease
- Auto insurance
- Health insurance premiums
- Cable or satellite
- Phone, cell phone, internet
- Memberships (Netflix, Spotify, etc.)
- Credit card, student loan, or HELOC payments
- Other payments to a retirement fund, college fund, or savings
- School costs: tuition or lunch money
- Kids’ lessons
- Daycare or after-school care
- House cleaning
Feel free to include allowances, haircuts, massages, gym memberships, or anything else that is a predictable expense that you pay out each month.
Step 3: Don’t Forget Your Annual or Quarterly Bills
These tend to be forgotten until they are due! Be sure to put them in your budget so it can be planned for!
- Club or Membership dues (country club, etc.)
- Life insurance
- Amazon Prime, McAfee, or similar memberships
- Property taxes
- Self-employment taxes
Step 4: Subtract
Subtract all of the ‘expenses’ from the ‘income,’ and you’ll see what you have to play with. This remaining amount actually what I refer to as ‘your budget’ because it is what you actually have to keep under control each month!
If by chance, your expenses are already more than your income, then you have two options:
- Spend less money
- Make more money
Evaluate all of your bills and see if there are any you can cut down on or do without. If you’re willing to go-big-or-go-home, look into downsizing your cars or home. Once you’ve done that, look into ways to make extra money.
If you’re good there, then the next step is to get a better handle on your discretionary expenses (your real budget). This is the budget that includes things you have to make decisions on every day: groceries, household items, entertainment, etc.
Good luck! Be sure to look around my website for more great tips on staying on a budget, cutting expenses, and being more efficient in general.
Is this the first time you’ve set up a budget? Leave a message below and I’ll cheer you on!
Get my FREE worksheet The Simple Budget here!
See how to use it here.