Building Yourself a Budget

Having a weekly or monthly budget is the Number One thing you can do to get your financial life in order.

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“You got money now. But before you know it… you overspend, you’re behind in bills and rent, and you’re back to square one!” – How to Make a Budget Plan, Ena Que, Forever Ena

A good budget allows for a number of things:

  1. You know how much you can spend
  2. You know what you currently spend your money on
  3. You can remove wasteful spending
  4. You become accountable for your habits

The most important element of a budget is BEING ORGANIZED.  You can make it in a notebook.  You can write it on a napkin.  You can be like me and create a custom spreadsheet document.  It doesn’t matter as long it’s consistent and ORGANIZED.

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So, start by picking a method to stay organized and pick an increment of time.  Are you going to budget yourself weekly?  Or would you rather budget monthly?

I chose to make a monthly budget as my wife and I each get a paycheck twice a month.  I then made a spreadsheet on my computer (I used Excel, but Google Sheets is also great) that details all the sources of income our family has.

If interested here’s my Budget Template. Or feel free to create your own.

After getting my document set up I added all of the debt totals and bills.  After subtracting this from our income this left me with what I call “discretionary money.”  This is money for all of the general purchases you make besides debt and bills.  The goal here is to make sure your spending is equal to or lower than your income.  Once you determine your “extra” income you can create plans for spending.

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How much money do I need for my Target run? How much each week should I spend on groceries?  Mobile app purchases?  Daily coffee?  Emergency Fund? PRIORITIZE.  Find a comfortable number and set that as your discretionary spending.

My wife and I determined that we can spend $400 each week on things like take out, gasoline, groceries and “fun stuff.”  We then opened a new checking/debit account with another institution than we normally use.  Each week I deposit $400 into that account.  Whenever our purchases are not bill or debt related we spend from our “Budget Account.”  If we run out. OOPS!  We’re done spending for the week.

This forces you to plan ahead, make hard decisions regarding that candy bar or fast food and the accountability is now finally there for us.

It is fine to make adjustments.  We originally started with $500 per week and found that we had no money to put away in savings for long weekends and special purchases.  We tightened to $400 and take the remaining $100 and set it aside for weeks we might go over.

Adjustments are also very important for anyone trying this.  Make it work for you.  Adapt.  Just stay organized and be consistent with applying your budget.  Good luck!

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