Three Budgeting Tips to Help Get You Started

By now you’ve probably heard me mention budgeting several times (you may want to check outsome of my other posts as well) and its role in getting out of debt and achieving total financial fitness. I believe a solid working budget is the greatest weapon against debt in anyone’s financial arsenal. And you can’t build wealth and reach your goal of being financially fit until you are out of debt. So today I am going to help you get started on creating a very basic, quick-start budget. You can download a free copy of the Quick Start Budget form at the bottom of this post.This budget covers just the basic living expenses – it is a step toward being able to create a full and more detailed budget later.

“A solid working budget is the greatest weapon against debt in anyone’s financial arsenal.”

The number one goal of every budget is to tell your money where to go – as in every dollar being spent must be accounted for. And in order to do that, you have to know where your money is currently going. Most people when asked have no idea how much money they spend on any given category. This leads us to my first tip.

Tip #1 – Find Your Money

In order to create a budget (also known as your cash-flow plan), you will first need to find out where all of your money is going. You will need to find any mortgage or rental statements along with any insurance (homeowners or renters) payments and utility bills. Have a car loan? The amount you are paying per month will be needed. Bank and credit card statements are usually available online with up to three months of transactions, so reviewing these will help remember and organize recent expenses – so they can be placed on the budget if appropriate. For those of you that have not been tracking expenses before – you may be surprised by what you find.

Remember, this is just a quick start budget – you may not have all the information (yet) so if you do not have exact numbers your best guess will do. Once we get the basics down we’ll move onto a much more detailed cash-flow plan. But for now…let’s keep it simple.

As you move forward with the budgeting process, begin collecting and noting all expenditures and try to categorize them as best you can right away. Having this information as early as possible will be a huge help when it comes time to complete your much more detailed cash-flow plan.

Tip #2 – Creating your Quick Start Budget

Now that you have gathered all of the information needed or as much as you can find at this early stage, you can go ahead and begin filling in the blanks – again best guesses here will suffice. Once you have each blank space filled begin adding up the total for each category and place it in the Total box. Once each category is completed you can then add up the total of each category and put that number in the Category Totals box.

Side Note: For those of you who are married, I strongly urge you to work together throughout the entire budgeting process. Start this budgeting journey together and allow this process to strengthen your marriage. While there is usually one spouse more gifted in handling finances, having someone alongside you sharing the burden is important. Working together will put you both on the same page as you move forward and create stronger teamwork. It can also be a great learning experience for the spouse that doesn’t pay the bills or deal with many of the banking responsibilities.

“Communicating and working together on your financial planning, including budgeting, can have a tremendously positive impact on a marriage.”

Tip #3 – Track your spending

Moving forward you will need to track every dollar you spend. Doing this will be critical in order to complete (and stick to) a solid working budget. What you are working on with the Quickstart Budget is a very basic budget that covers only the essential costs of living – so we know there are a number of categories missing – but it is a great way to get started initially. To really create the best cash-flow plan you are going to need to begin tracking every dollar out and every dollar in. Don’t get overwhelmed here – while this may seem like a daunting task there are different approaches and tools to help track your spending.

There are online mobile apps that you can download on your phone, like Mint (you can even connect your bank account to the app and it will categorize your spending) or EveryDollar. My husband and I are huge fans of Quicken and we have been using it for years. If you are a little less tech savvy there is no shame in going old-school and tracking via pen & paper. Regardless of the method you choose, it is key to be committed and consistent in your tracking in order to create an accurate budget. You cannot tell your money where to go if you have no idea where it is going.

Final thoughts

One last piece of advice before you head off to begin working on your budget. Be patient. Remember that budgeting, paying off debt and building wealth takes hard work and time. But I promise you the end result will be so worth it.

“Living a life of financial freedom is the pathway to living the life of your dreams.”