Budgeting can be overwhelming if you don’t go into it with some kind of game plan.

When you sit down to make your budget, first decide why you’re making it.  Is it to get out of debt, go on a family vacation or simply to be a good steward of your money?  When you have a goal, you can refer back to it every time you consider purchasing something outside of your budget and remember that you’re saving for a higher purpose. Motivation is key to achieving your goals!

Monthly Expenses:

First, you need to have a realistic idea of what you spend each month by adding up all of your expenses.  Don’t forget to consider big expenses that may not happen on a monthly basis like car taxes, insurance payments, etc.

If you need some more help getting started on this part of budgeting, download Dave Ramsey’s FREE Guide to Budgeting.

Housing (Mortgage/Rent, taxes, insurance):
Grocery purchases:
Household purchases:
Medical:
Childcare:
Transportation (car, gas, insurance, tax):
Utilities:
Electric & Water:
       Phone & Internet:
       Cable & Entertainment:
Clothing:
Savings:
Charity:
Debt Payments not mentioned above:
Miscellaneous:

Total Spent:

 Budgeting isn’t easy.  It forces you to look at your needs vs. wants and maybe make some cuts in your lifestyle.  If you’re curious how much of your family’s income should go to what, here’s how much the gurus say you should dedicate to your expenses:

Charity: 10%
Housing: 30%
Utilities: 5-10%
Food & Household: 10%
Clothing: 2-7%
Transportation: 10%
Medical: 5-10%
Miscellaneous: 1-2%

That hopefully will leave 13-23% that can go into savings or paying off debt.

So, say you make $45,000 a year after taxes. That is $3,750 per month.

You budget would look like this:

Charity: $375
Housing: $1,125
Utilities: $262.50
Food & Household: $375
Clothing: $75
Transportation: $375
Medical: $187.50
Miscellaneous: $75

Total Budgeted: $2,848

That means you still have $902 left to budget. By the time you are finished with your budget, every dollar should have a job. There shouldn’t be any money left over.

Savings: $902

Other things you may need to include: credit card bills, car payments, child care expenses, retirement, burn money, etc.

Remember to keep it simple. There is no need to have a separate category for bath tissue. Just put it under household. If you add purchases in as your go or use cash, you should be able to keep it to 30 minutes to 1 hour for budgeting each much.

Creating Your Budget:

The hard part is done.  Now you need to match your income to what you have going out.  If you can’t make the ends meet, you’re not allowed to use credit to make up the difference.  You’re going to need to make the tough cut-backs.  We have to remember the difference between needs and wants.  If you can put it on a list and wait 30 days to ponder if you really want to buy it, it’s officially a want.  Please don’t put bath tissue on that list.

Need help getting started on cutting your expenses?

How to Save Money on Your Utility Bills

Online Couponing Class

Looking for a program to set up your budget? There are some great free options. One of the most popular free options is Mint.com. Another favorite is YNAB. It is a little on the pricey side, but is great for beginners. It teaches you to live on last month’s income. You can try it free for 30 days and they also have free, live classes. Other favorites include pen and paper, spreadsheets, and Quicken.

If your family is in debt or you want to learn more about finances, I highly recommend Dave Ramsey’s Total Money Makeover and Financial Peace. There is so much that we can’t possibly over in one post. Whatever your goals, knowledge is power. The more you know, the better decisions you can make, so educate yourself.

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