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Save Money Creating A Budget: My Version

Updated on October 21, 2013


My Shot at Creating a Budget

I know, I know, this has been done a million times. Well here is a million and one. I have read a ton of different ideas on how to create, organize and implement a budget. There are some great resources out there, and I will give my two cents on some of them. But first, we need to create a budget.

Many people who teach budget creation tell you to track every penny in and every penny out for a few months, that way you get a good average of your income and expenses, giving you an accurate picture. Now I do not know about you, but that sounds tedious and exhausting. A budget is not a permanently completed task once you initially complete it. Consider it a start, and a constant work in progress that will be fine tuned and changed often. I suggest this because I know your income and expenses will not always stay the same.

Here are my quick start budget directions:

- Using a note pad, word document or excel spreadsheet to track down your forms of income and amounts, round DOWN to the nearest $10.(if your income is $2,457 a month, round to $2,450)

- Now list out all of your regular expenses. These are expenses that are paid every month and are generally about the same amount each month. Examples are utilities, your cell phone, gym membership, subscriptions, etc. When putting these in your budget, round UP to the nearest $5.(if your cell phone bill is $72.13 a month, round to $75)

- Now, do not spend a lot of time doing this, remember you can always add to it, tweak and update it at any time. So in the middle of the night when you remember that you have a date night once a month, you can add it in the morning. Input your best guess as to the average cost of your other expenses that are not so regular. Examples are gas, groceries, shopping for clothes, etc. Again, round these UP to the nearest $5.

Place the income on one side and the expenses on the other. Place your totals at the bottom across from each other, subtract the two, and hopefully you have a positive number, and not a negative one. If you have a negative number, do not worry, that is exactly why we are going down the budget road!

Noticed that your income (take home income) was rounded down and your expenses were rounded up. What this creates is an unseen buffer that you will account for but does not actually exist. This helps you strive for saving money, but you will actually have more in your accounts than is shown in your budget. Think of this as setting your clock 10 minutes ahead, so when your alarm goes off in the morning, you actually have a little more time than you think you do. Another advantage to this is that it makes it really quick and easy to add up, and who doesn't like that?

Once you have your budget started, keep it open on your computer or the paper out on the table. Take a break, and when something hits you that you need to add, update or change, do it!

We will pick up on the next step tomorrow, deciding what to actually budget! Go here for the Part 2.

For more information on personal finance, http://www.stewardology.com/blog

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