When I first started budgeting, I felt a little overwhelmed because there was so much information I was trying to process at once. This Budget Template helped me dissect my finances into something digestable and the ability to give every dollar a job and ensured my finances lined up with my goals!
The budget template is numbered so you can easily follow along this guide. This guide will help you understand you understand the different categories, the importance of each, and help with identifying which goal should be a priority.
Start out by listing your projected income for the month at the top of your budget sheet or template. If you receive bi-weekly payments you will have two payments listed on there, and if you get paid weekly you would have four payments listed. Keep in mind to include any additional paycheck(s) during the months that have an extra payday!
Now it’s time to start jotting down your fixed expenses. To me, these fixed expenses are considered necessities in my life and items I need to be functioning at the bare minimum. A few things I put on this category are mortgage, household utilities, car payment, and cell phone bill. I included my car and cell phone because they are vital to my job and are needed to generate income.
TIP: I highly suggest using the Budget Guide provided above but a secondary option is plain old paper and pen. Stay away from electronic options.
Next up is variable expenses… this part of your budget will allow you to budget for things that vary on the amount from month to month or non-essentials. Variable expenses is usually where most of us spend beyond what we should spend. This category should allow you to intentionally spend your money on items that aren’t essential but wants.
Some of the things I put on this category are: groceries/household, netflix, spotify, gas, grooming, gym membership, entertainment, and dining out. Some months these sub categories will have a projected $0 but keeping these items in there reminds me that I if I want to budget for them I can make adjustments to fit that in – its all about priorities.
One of the major reasons why “emergencies” feel like financial catastrophes is due to lack of planning. Sinking Funds, funds set aside for a planned expense, are one of the most important parts of budgeting because this is where you’ll project for future planned expenses. By planning ahead and being realistic with what’s coming short and long term will allow you to be better prepared financially, and give you peace of mind.
The past few Christmases for me felt full of guilty spending and I welcomed the new year with a pile of debt and felt like that was the normal thing to do. However, December 25th comes every year, and so do other expenses. By saving little increments prior to the due date, you feel the “emergency” less and feel more prepared. I now start my sinking fund for Christmas in January and save a little every month and by end of November (around Black Friday) I have the cash ready to spend guilt-free.
Figure out what your projected sinking funds will be and how much time you have prior to incurring the expense. This will determine how much you will be putting away every month for your sinking fund. For Example: If its January 1, 2020 and your usual Christmas gifts are $1,000 that means you have approximately 11 months until you have to pay for that expense. $1,000 divided by 11 months = $91 a month is what you’ll need to save so by November 2020 you’re prepared for the expense!
Paying yourself first is something I highly recommend. However, savings and debt can be managed differently according to your specific goals. If you don’t have any debts, excluding mortgage, I would recommend automating your savings.
I automate my savings by setting up my paycheck into three different direct deposits. The first one is my savings amount (fixed amount), then is my (IRA) account, and lastly is my checking account, where I will pay my fixed and variable expenses. By doing this, you’re also training yourself to believe your paycheck is the amount you receive in your checking account. I used to throw everything in my checking first because I wanted to decide when and how much was going into my savings but that turned out to be very rarely and not enough!
“The borrower is slave to the lender”
If you have any kind of debt, not including your mortgage, you should focus on building a starter emergency fund of $1,000-$3,000. This will give you a cushion that will help prevent any emergencies from making you go further into debt.
After you’ve figured out how much is left after having your emergency fund fully funded and 1-4 covered, focus on KILLING your debt. Throw all your extra money into it. You can choose whether to use a Snowball or Avalanche method – choosing to pay off debt is more important than getting stuck on the details of each method. Just start.
There might be a handful of people that will say “debt is normal”, “there’s good debt”, “your credit score will go down”, etc etc. Ignore these people and focus on your WHY.
The debt free journey can be long and certainly hard, but focus intensely on your WHY and what you want to do with all that extra money you’re sending to debt every month.
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