Most families looking to create a budget are living paycheck to paycheck. Whether you’re self-employed or working for an employer, creating a budget when you barely have the funds, to begin with, can be quite intimidating. While I understand living paycheck to paycheck can seem very discouraging when it comes to the idea of creating a budget, but I’m here to tell you that regardless of how much money you make, you can create and stick with a budget using these easy to follow tips.
Know Where Money is Going
The first step to creating a budget is to know where you’re spending money. Create a list of expenses from largest to smallest. Designate each expense as a necessary or unnecessary item. Once you know where your money is going, you’ll be more equipped to cut costs and focus on what spending needs to occur on a regular basis.
Cut Unnecessary Spending
It doesn’t matter how little or large the sum of money is when you opt to cut unnecessary spending, every penny counts when you think about cutting expenses. Focus on the extra items that perhaps you get when at a convenience store or maybe you have a habit that should be broken in order to focus on alleviating that extra spending. Cut anything that’s reasonable to cut and labeled as unnecessary.
Most families fail when it comes to setting a budget because they create unreasonable expectations. When you’re evaluating what expenses to cut, be sure that these expenses are ones in which you’re fully capable of and committed to removing from your household expenditures list. Be sure to leave one small unnecessary expense just so you feel a little freedom while you pull the reigns in on spending.
Create a Spreadsheet
Using Excel or similar spreadsheet program, create columns for income and expenses. Income notation may be difficult if you’re a freelancer, but it can be done. Figure out an average of your monthly income, divide it by 4 weeks and list this number so your weekly income. Then take your necessary expense list and document what that cost is weekly.
Do the Math
Now that you’ve taken all of the steps above to create a budget for the paycheck to paycheck families, you can do the math and start planning. Subtract the necessary expenses from your income total, figure out what that number is. Take a moment to tweak any expenses that may not fit into this budget and work the numbers around until you’ve attained a budget amount that is reasonable to stick with.
These budget tips show you one thing, that regardless of how much income you have coming into your household, that saving money is attainable. You simply have to stay focused on following these tips to create a budget and then stay dedicated to your mission to start saving money. Once you’ve been able to maintain this budget for a period of 90 days, you’ll start to see the results of this smart financial change and in turn, see that you can save money for future emergencies.