Budgeting may seem overwhelming, especially when you’re just starting out. However, with a structured approach, anyone can take control of their finances and even find joy in managing their money. In this post, I will guide you through 5 easy steps to start budgeting that will fit seamlessly into your lifestyle.
1. Download Excel or Use Online Google Sheets
If you don’t even know about Excel at all, check out Google Sheets its basically an online version of excel but much simpler to start off.
Well, the first easy step here is download and buy Excel. If you don’t even have that, I suggest using StackSocial to grab yourself a cheap deal on Excel with the Microsoft Office package.
2. Choose Your Budgeting Method: Low-Tech vs. High-Tech
Now that you realize the significance of budgeting, it’s time to choose the method that best suits you.
If you prefer a classic approach, consider pen and paper or a simple spreadsheet.
For tech-savvy individuals, downloading Excel or using Google Sheets can streamline the budgeting process considerably. With these tools, you can easily create customizable templates that cater to your unique financial situation.
Meanwhile, you might find Excel Etsy templates particularly helpful; they often come pre-loaded with formulas and budgeting categories, making setup seamless. If one method doesn’t feel right, don’t hesitate to experiment with different formats until you find the one that resonates with your lifestyle.
The goal is to make budgeting a routine part of your financial management.
3. Listing Your Income and Expenses
Next, you need to take inventory of your financial landscape. Start by adding up all your sources of income.
This could include your job, freelance work, side hustles, and any passive income streams.
Make sure to track your pay stubs meticulously, as they provide a clear reflection of what you truly take home after taxes and deductions.
Once you understand your income, it’s time to delve into your expenses. Track your expenses diligently by categorizing them into fixed and variable expenses. Fixed expenses include rent or mortgage, insurance, and utilities—all of which remain constant month to month.
On the other hand, variable expenses include groceries, entertainment, and dining out, which can fluctuate.
This differentiation is vital for creating a realistic and effective budget that works for you.
4. Developing Your Budget
With a clear understanding of your income and expenses in place, you can now develop your budget. Start by allocating your income to meet essential expenses first. After covering fixed expenses, determine how much you’d like to spend on variable expenses while still setting aside a portion for savings leftover.
A good rule of thumb is the 50/30/20 rule: 50% of your income goes to necessities, 30% to wants, and 20% to savings and debt repayment. However, feel free to adjust these percentages based on your personal preferences and needs.
For example, if you prioritize saving for a big purchase, you might allocate a higher percentage there.
I personally like go for a much more aggressive savings between the range of 30% – 40% savings since I really want to get ahead of my investments with a very frugal lifestyle.
I see a lot of opportunities when it comes to investment allocation whether its cryptocurrency, exchange traded funds (ETF’s), and even stocks in this economy.
5. Monitoring and Adjusting Your Budget
Once you’ve established your budget, the final step is to monitor and adjust as needed. Regularly review your budget, ideally on a monthly basis, to see if you’re sticking to your plan.
This is where tracking your expenses becomes invaluable. Utilize the tools you’ve selected, such as Excel or Google Sheets, to input your expenses and income consistently.
I like to do this every quarter and evaluate my expenses to make sure I’m consistently on track. Month to month tracking sometimes seems a bit too much as I think of this as more of penny pinching every expense.
If you’re a frugal person, it’s okay to have some leisure on your expenses. I believe if you’re on a very tight budget, the best way is to make extra income.
If you find yourself overspending in certain areas, don’t hesitate to reevaluate your budget. Perhaps you can cut back on dining out or entertainment to allocate more funds toward savings. Remember, budgeting is not a one-time task; it’s an ongoing process that requires flexibility and attention. Adjusting your budget will ultimately help you refine your financial goals over time.
5. Conclusion
Starting a budget may seem daunting, but by following these 5 steps, you can develop a system that works for you. Always remember that budgeting is about empowerment—taking charge of your financial future rather than leaving it to chance.
Downloading Excel or using Google Sheets can simplify the process, while Excel Etsy templates can give you a head start.
As you implement these steps, you may find yourself feeling more in control and less stressed about financial matters. Over time, careful tracking of your expenses and income can lead to savings left over that you can use for things you enjoy or future investments.
Embrace the journey of budgeting, and watch as it transforms your relationship with money.