I don't know many people that actually like budgeting, except for a few crazies like myself. Budgeting is an essential key to building wealth. You must know how much you're getting paid and how much you're spending. A budget is just telling your money where it's going to go, versus your money telling you where it's going. There are so many distractions out there to take your money away from you. No matter where you look there is a sale going on to inspire you to spend. I will tell you that it's easier to avoid the temptation when you've done a budget.
- Don't beat yourself up after the first month, it will take you a few months to get your budget right.
- Do a budget according to you and your family's situation, not according to what others spend on groceries, travel and gas.
- Do a budget at least every month. I do a bi-weekly budget, usually a couple days before I get paid. But remember I actually like doing budgets. Monthly is fine.
- If you're married, do a budget with your spouse.
- Give a name to every dollar before your pay arrives. E.g. $1200 mortgage payment, $300 grocery, $200 savings, $100 fun money.
- Write down everything you spend money on for one month, when the month ends, review your list. Look for any purchases that you can eliminate. Your eliminated purchases can be used for debt repayment or savings.
- Do not rely on bonuses, raises or tax returns because they may not come. Budget for them when you are certain you'll be getting it.
- Accurately list your income and expenses. Do not round these numbers up. It's important for you to know the exact number for your income and expenses or your budget will not work.
- Don't forget to budget for expenses that you don't pay monthly, such as life insurance, income and property taxes
- Keep it simple by customizing an excel worksheet. Start with categories that are common to you, then you can add more categories as you get more comfortable with your budget