Budgeting for Beginners
So making a budget seems pretty straight forward, right? You write down your income, subtract your needs, and bam! Budget!
I see people budget this way, then fail to stick to it all the time.
They make the mistake of setting some categories as too restrictive. And it stems from the problem of having the wrong idea of what they need to feel satisfied and not deprived.
How can you set a budget that helps you curate financial strength and is enough to be sustainable for the long term?
Before You Make a Budget
So, here’s is the secret to making the best budget for you: track your spending for the period you will be budgeting. Know where every penny goes.
I know it sounds intimidating, but you don’t have to start off keeping meticulous records. If you spend on a card for the majority of your purchases, you can use one of several apps to analyze your spending or you can keep all your receipts and organize them at the end of your time.
Analyzing Your Spending
So let’s imagine, you need to budget for two weeks at a time. You should examine your spending for the previous two weeks.
Make a category for the grocery store, fast food, rent/mortgage, utilities, gas, credit cards, student loans, car note, etc. Put every purchase into a category. Then add up all the purchases under that category to get an idea of what you spent for the last two weeks.
Some of your categories will have the same cost every month. These are called fixed expenses. Fixed expenses are like your mortgage payment because they are the exact same every month. Categories like food and utilities, that fluctuate are called variable expenses. This is where the problems occur for most people. Variable expenses are the ones that you need to consider intimately. You can change variable expenses.
I have analyzed our spending at times and humiliated myself because of wasteful spending habits like relying too much on fast food. But once you have an idea of what you were doing, you can fashion a better plan for the next weeks.
How to Change Your Spending Habits Sustainably
So you analyzed your spending and see that you need to make several changes. Been there. I know it’s discouraging and can make you feel like you are suffocating. But don’t try to change too much all at once! Feeling deprived is going to make it harder to make the lifestyle changes you need to make financial fortitude a habit.
So pick one area and slowly bring spending under control. Quitting or reducing fast food and your grocery budget are great places to start! And even then, ease yourself into drastic changes over some time.
Are you interested in hearing more about how to reduce your food budget? Let me know below!