When it comes to creating a simple budget (or any type of budget for that matter), I feel half the battle is in just getting started. If the concept of budgeting were easy, why… everyone would be doing it! In fact, I’m pretty sure the money savvy Millennials out there have sparked new ways of getting out of debt – whether you found it in a new app on your phone or in a fancy “printable” you discovered while pinning on Pinterest. Regardless of how creatively “Budgeting” is packaged, it doesn’t change the tiny, simple, fact that you’re the one who needs to maintain it, whatever method you decide to use.
A simple budget means it’s not too detailed and only takes a few minutes to maintain/update every time you give it some attention. These two key elements increase your chances of “sticking to it” a lot higher. Think of all the little things we need to do, but put off because of the tedious, time-consuming, steps to complete it. Not that the task is “difficult” – but it seems that there is more that goes into it than we get out of it. Like making dinner some nights.
How do you create a simple budget?
- Write down your net-income (after taxes – your take home). This will set the limit for what your budget can handle. The max amount it could spend, if you had to spend all your money.
- Track your spending. There are a handful of ways to do this and hopefully one works for you, but this is VITAL! You have to track spending routinely. Whether you use an app, keep every receipt, or recall from memory… this is a required step.
- Set your goals. What do you hope to achieve by living the budgeted lifestyle? Is it to get out of debt faster? Is it to save for retirement? Is it to travel more? Determine what your goals are and their priorities. Focus on one, and then move to the next. You’ll make slow progress spreading yourself out if you attempt to accomplish them all at once.
- Make a plan. Whatever your motivation might be, it’ll be important to determine what it’ll take to achieve it. For example, how much money do you need to save each month so you can take a big trip once a year. Or, how much money do you need to put towards you loans so they are paid off in 3 years, etc.
- Adjust your habits if necessary. In the beginning, this might seem like a tough one to tackle as it’ll be hard to imagine altering your lifestyle for a sacrifice. Giving up a perk or a comfy convenience can be tough, but with time, you’ll find yourself more willing to such things.
- Keep checking in. Setting up a budget is only a small piece in the grand scheme of things. Making sure your budget is up-to-date with your latest spending will help you take care of Step 2 above, but also help you make better spending decisions moving forward.
How often should I update my budget?
There is a distinction between updating, and maintaining a budget. Updating a budget means you’re making changes to how much you spending on Groceries during the month. Or you traded-in your car and your car payment lowered.
You should update your budget at least once a year, unless there’s been big changes that would affect where and how you spend your money.
How often should I maintain my budget?
Maintaining your budget is making sure it’s up-to-date and includes all of your tracked spending. There are no big changes, just making sure everything accounted for.
In this case, check in at least once a week to make sure everything is looking good.
The longer you go without maintaining your budget, the more time it’ll take to get everything entered in. And if it’s going to take more time, the chances of you actually doing it are slim. So… EVERY WEEK! It’ll only take a few minutes and you can continue your regularly scheduled programming.