I think most people understand that it takes money to do things — get food, clothes, have a place to live. Money is a tool to help you do the things you want to do and have the things that you need/want. But I hear some people talking about “not knowing how much money they have” or “avoiding the mailbox/inbox so they don’t have to look at their bills”. Money and bills don’t have to be scary or something you avoid — It may be hard, but the best way to take control of your money is to tackle it head on and create a budget. This post will explain a few reasons why you definitely should have a budget, how you can make one, and a few ways to consider cutting costs.

WHY SHOULD I BUDGET MY MONEY?

First off, some people think of a “budget” as a bad thing, or a restriction in some way. Personally, I feel happier and less restricted having a budget. A budget is just a written plan for your money — by planning out your expenses for the month ($1000 for rent, $100 groceries, etc.), you know EXACTLY how much money you have and EXACTLY where it is going. If you have $100 budgeted for clothes, then you don’t have to feel guilty for shopping, or wonder if you’ll have enough to cover rent at the end of the month. You can relax and know that “it’s ok for me to spend this $100 because my budget said so.” It’s a way better feeling to know you’re in control of your money than being too scared to log into your account and hoping you didn’t overdraft.

PAY OFF YOUR DEBT

Having a monthly budget can help focus you on paying off any debt. We really stuck to our budget so we could put every extra cent toward paying off debt. We paid off our cars and a student loan and it was the most freeing feeling ever. I didn’t realize the weight I felt with these extra bills until we paid them off and it lifted. And it’s amazing because now that $300 payment, that $200 payment, etc is just extra money that we can put towards other things. If we want to go on a trip or buy something large, we just budget for it now and save until we have the cash to do it. It’s way more enjoyable to go on a trip/vacation and pay for everything right off — we don’t have to worry about checking the credit card statement when we get back and seeing all the “damage” we did/debt we racked up. Debt just ties you to the past and prevents you from moving forward. Get rid of any debt you have and start investing in your now and your future.

I MAKE A LOT OF MONEY – I DON’T NEED A BUDGET

What if you have a good amount of money, and you aren’t worried about paying bills or over drafting your account? It’s still good for you to have a budget too. Having a budget helps you to be intentional with your spending. When you put your budget to paper, it’s a lot easier to analyze your spending habits. Yeah, you can “afford” weekly shopping trips at $500+, but is that how you really want to spend your money? Or you may not really be aware how much you’re eating out because you have enough money to comfortably cover it, but when you analyze that monthly cost, maybe there’s something else you’d rather use your money toward. Budgeting can benefit everyone.

I DON’T MAKE ENOUGH MONEY TO HAVE A BUDGET

If you are struggling to make ends meet, you may think that you don’t need a budget or cannot budget. Just because your budget is coming up negative, does not mean you don’t need one or can’t benefit from one. It can be scary or frustrating, but having a budget can help you figure out a plan and set up priorities for the month. It’s especially important to track and budget your money when every cent matters.

HOW DO I MAKE A BUDGET

Everyone can benefit from having a budget, but maybe you don’t know where to start. This is going to vary for everyone based on their personal situation — how often you get paid, what bills you have, and when they’re due — but I am going to walk you through exactly what I did to create my first budget and what I do each month to track everything.

★ Write Out Your Expenses

I prefer to actually write things down because it helps me to really visualize what I’m working with. I also like to keep this kind of information in one place so I can reference it, so I would write everything in my Erin Condren Life Planner. I would write out every bill, every debt, every category that I had as an expense — so these are things like: rent/mortgage, utility bills, cell phone bill, Netflix, Spotify, car payment, auto insurance, groceries (average/month), pet food, gas for my car.

I would write out all of these things and the average amount each cost — so your rent and cell phone bill are probably the same each month, but other things like groceries and gas maybe vary each month. For the variable expenses, I would log into my account and see how much I spent in those categories on average over the last 3 months, and just use that average amount.

So now, I have a list of all my monthly expenses and an amount that I spent each month. I would just double check my bank account to make sure I didn’t forget anything, or maybe any expenses that only occur every other month.

★ Create a Spreadsheet + Organize Your Information

I like to plug my numbers into a spreadsheet so I don’t have to think about doing the math and I can group everything into categories (this helps me later when I am tracking expenses throughout the month). If you aren’t into spreadsheets, you can do it manually/with a calculator and writing it down of course.

This is just a rough draft spreadsheet at this point. I just type in my monthly income at the top, and then key in all my expenses that I just compiled below that. I’ll total the expenses and subtract it from my monthly income to get whatever amount I have left over. In this example, I have $1,326 left over that I can use toward whatever I want — saving for a vacation, buying a new sofa, Christmas shopping, back to school clothes — whatever I decide, I can feel confident that this money is ok for me to spend because my budget told me so.

★ Plan Your Next Steps

Whatever you plan to use your extra money for, document it. Don’t just say “I have $1300 to do whatever I want” — give your money a plan. I highly suggest putting every extra dollar you have left over towards debt. Kill it as fast as you can because the sooner you are out of debt, the sooner you can move on to using your money for present/future things. If you are using your money to save for a vacation, document it and create a separate budget for your vacation so you know how much you need to save. Documenting your plan for the extra money will help you to be intentional with your spending and keep you from accidentally breaking your budget.

★ Add Back Rare Expenses

Sometimes there are expenses that just come up unexpectedly or rarely, like an oil change, car registration, baby shower, or someone’s birthday. Document any of these expenses into your budget for that month. Planning for an expense takes away any mystery or questions about if you can afford it.

★ Eliminate Debt

If your plan for the extra/left over money is to eliminate debt, I wanted to give a little more detail on how we did it. We followed the Dave Ramsey Baby Steps plan that I found out about just by listening to his free podcast.

In Baby Step 1, you need to put $1000 into an emergency fund. This is for emergencies only — like your car broke down, or something unexpected.

In Baby Step 2, you just put every extra dollar toward debt in the order of your smallest debt first to largest debt last. The idea is that once you pay off that smallest debt, you’ll take the extra left over money plus whatever money you would have used toward that payment and put it toward that next smallest debt until it’s all paid off. You’ll feel motivated to keep it up when you see each little debt get paid off.

In Baby Step 3, you take any extra money and put it toward a 3-6 month emergency fund. This amount should be able to cover 3-6 months of whatever your expenses are.

★ Stick to the Plan

Your budget won’t work for you unless you use it. Once I set my budget, I print it out and keep a copy in my planner so I can update it as I pay bills and buy things during the month. Having my budget so readily available helps me to stay on track and keep up with tracking my expenses. I like being able to glance at my planner and know what bills need to be paid for the rest of the month.

HOW TO REDUCE EXPENSES

Make a Shopping List

I always make a list before going to the grocery store; it helps me remember everything I need to buy and also helps me to not make an impulse buy. When I put a little effort into making a shopping list, I am kind of forced into planning meals and figuring out what we really need to buy. It definitely helps to reduce impulse buys and keeps me from having to make mini trips to the store throughout the week.

Cook At Home

Eating out can be convenient and nice, but it comes at a premium. If it’s in the budget, you don’t have to feel guilty about it, but it is much less expensive to cook meals at home, so this can save you a lot of money.

Cut Non-Essential Expenses

If you have any non-essential services that you may not be using that much, consider cutting them out. We haven’t had cable for years and it’s an easy way to reduce expenses. If you have any subscription services or accounts that you aren’t getting your full use out of, cancel them.

Reduce Your Fixed Expenses

It doesn’t hurt to call your internet provider, cell phone company, or whoever and see if they can reduce your monthly bill. A lot of times, they can give you a new promotional deal, or price match a competing company. And if not, consider switching to a competitor — don’t just stay with a company because it’s convenient, sometimes a little hassle and research can save you a few hundred dollars.




Now you know how everyone can benefit from having a budget, and have some ideas on  how you can reduce your expenses. Budgeting is easy and lets you be in control of your money, I hope this post has inspired you to start your budgeting journey today!