How to Create a Budget

Creating a budget sound cumbersome, daunting, and a total Debbie Downer. Why would anyone want to create a budget? Because creating a budget can lead to JOY!

How can budgets lead to joy? Let’s look at some stats:

The Numbers

If you’re like most Americans you spend the majority of your money on house, car, and credit card payments. If you’re young, you can add student debt to that. Mortgages are typically 27% of your budget. Auto expenses, an additional 17%.[1] Credit card debt 10%. That’s over half your money going towards debt. How can this lead to joy?

Beyond Numbers

By making a budget you bring awareness to where you’re spending money. It also tells you where you are NOT spending your money, i.e. things that bring you joy. With your new found awareness, you can make conscious choices to change where you direct your cash flow.

How to Create a Budget

1. Grab a pen and paper.
2. Grab your bank and credit card statements.
3. Download and complete this PDF budget worksheet.
4. Compare your totals against your Quick and Dirty Budget net income figures.

It’s that simple. You can compare your numbers with the rest of us at The Bureau of Labor and Statistics. But if you find out you’re not spending money where you have the most fun, you might consider making some changes.

Track Your Budget

My original intent was to share with you all a budgeting software called You Need A Budget. There are many advisors that recommend it. For me, it just didn’t click. So I returned to my old standby – Mint. At Mint, you can download your transactions and it will categorize them automatically. Adjust a few categories here and tag a few items there and you’ll have your budget on autopilot.

Takeaway

Budgeting isn’t always fun. But the results can be. By bringing awareness to where you spend you money, you can make the necessary changes to make money matters happy again.

To budget like a millionaire, check out 3 Ways to Reduce Living Expenses.