Introduction Of How To Make A Budget From Scratch 2021
How To Make A Budget From Scratch 2021. First things first when you are starting your budget for the very first time let’s just keep it simple so the first thing that you’re going to do is you are going to list out your monthly income if you don’t know how much money you bring in every single month you can go back into your bank account statements and look up how much your paychecks are and if you’re an hourly worker you may want to take a look at the average of the last three months of pay just to see exactly.
Let’s say this is three thousand dollars per month next thing
How much you’re bringing in on average so let’s say this is three thousand dollars per month next thing you are going to do is list out all of your debt so this would include things like student loans credit card debt personal loans car loans you are going to list out everything and you are going to list out your minimum payments because.
We know that at least you have to pay the minimum payment every single month so that could look like this alright so these are all of your debts and these are the minimum payments that you have to make every single month then the next place that we are going to go is our fixed expenses so fixed expenses could include things like rent food utilities insurance gas if you don’t know how much you pay for food utilities insurance and gas you can go back in the last three months of expenses either through your bank account statement or your credit card statement add up.
Those numbers and then take an average across those three months and that’s going to help you determine exactly how much you are going to spend you can guestimate here if this is your very first time putting together a budget if you think you spend around three hundred dollars in food put three hundred dollars down and then the next month you are going to track exactly how often you’ve gone to the grocery store ordered takeout and you were going to add that in now one note about food is that I do put groceries under fixed because.
I’m going to be buying groceries every single month
I know I’m going to be buying groceries every single month whereas restaurants and takeout and delivery and things like that would go under my fun expenses so fun would be your next category when you are starting your budget this would include things like restaurants clothing shopping subscriptions things like Netflix amazon prime Spotify iTunes.
Whatever your subscriptions are every single month would go under fun because the subscriptions are not a necessity they’re nice to have and so you’re going to again go back into your bank account statement if you don’t know how much you’re spending on any of these items add them up for the month and then include them here or take your best guess now as you are filling out these three different sections the debt fixed and fun you want to make sure that all of these items are less than what you are bringing in because.
You want to make sure you’re not overspending your income let’s say all of these added up to 4 000 but you’re only bringing in 3 000 that means you’re overspending by a thousand dollars and that’s where things in the budget can change now the next category that you’ll want to pay attention to is future and future includes any type of savings that you might be working up towards maybe it’s a new car a house or vacation whatever it may be you can add in your future savings categories right inside of your budget so.
Financial goals every single month
That we can keep track of those financial goals every single month you’ll also want to create a section for fudge now fudge is not chocolate but I guess it could be but fudge means this is your buffer inside of your budget in case you overspend in a different area so this is like oh fudge I forgot that I need to buy mom a gift and so you can create a buffer hereof let’s say like 50 and if you go over or you forget about something else that’s not included in the rest of your budget you can pull from your fudge category.
YOU CAN ALSO READ
This is your buffer here all right the last thing that you want to do when you’re making your budget for the first time is once you get all of these basic subcategories filled out you want to add them up with your minimum debt payments and make sure that your total monthly expenses are less than your income and ideally you would want this to come out to a zero-based budget so that means our income minus expenses is zero and the reason why we want it to be zero is that anytime you have money left over.
Chances are that money either gets spent missed it’s forgotten about but in most cases, it gets spent and it needs to be allocated somewhere that’s what becomes purposeful budgeting for you so every dollar should have a name inside of your budget now if this ends up being a negative number up here so if your income and expenses.
Adjusted inside of your budget
If this was like four thousand dollars as i was saying then you’re negative one thousand dollars on the whole that means you’re overspending and something needs to be adjusted inside of your budget and that’s a basic basic rundown of how you put your budget together so that was obviously a very basic basic breakdown of how you put your budget together now.
I use a google spreadsheet and you can use the exact same one that i use to track my income and expenses every single month using the debt free millennials budget toolkit which is linked in the description box below for you to download for free and i have a budget toolkit tutorial linked up here so that you know exactly how to use it budgeting has been such a great tool for me not only to pay off debt but now to hit my financial goals.