What is Budgeting?
Budgeting is the most important step in your journey to financial freedom. In this step, you will be accounting for every dollar of income that you earn on a monthly basis. Budgeting will allow you to physically see where each of your dollars go every month. You will lay out all of your expenses, as well as how much you plan on saving and spending. A great plan to follow is my 50-30-20 rule if you’re not sure how much money to allocate to each category. Keeping track of every dollar will prevent you from unexpectedly running out of money and will ultimately help you reach your savings goals.
How do I start?
Personally, I use an excel spreadsheet and divide my monthly income into three categories: Saving, Expenses, and Giving. From there, I list out how much I want to save and how I want to invest my savings, I list all of my expenses, and I list the amount I’m giving. My spreadsheet is set up so that it automatically shows my total savings, total expenses, and the total amount I’m giving. It will also tell me how much money I have left over or if I’ve spent too much. I do alter my budget each month because my expenses aren’t necessarily the same every month. When my expenses change, I will have to move some money around in the budget.
The most important thing to remember is that you MUST stick to your budget. There’s no reason to have one if you don’t follow it. However, be flexible with your budget when you start to figure out what works best for you. If you’d like to use the budgeting spreadsheet that I use, please subscribe to my email list and I will email it to you! Thanks for reading!