She Strengthens

Waking Up to Reality: Creating a Budget That Works for You

As you roll out of bed on a lazy Sunday morning, the remnants of last night’s festivities still lingering, your gaze falls upon the pile of unopened envelopes on your kitchen counter. The stark reality of impending bills and expenses hits you like a ton of bricks. Suddenly, the allure of a greasy breakfast fades, replaced by the nagging question: “Will I have enough money to cover my expenses this month?”

Taking Control of Your Finances

Creating a budget from scratch can be a daunting task, especially when faced with the overwhelming array of budgeting apps and templates available. But before diving into the digital world, it’s essential to get a grip on your finances by creating a simple budget spreadsheet.

The Basics of Budgeting

My monthly budget is modeled after a basic accounting income statement, which calculates revenue minus expenses to find net income. In simpler terms, it’s your monthly paychecks minus your monthly spending, equaling what you have leftover at the end of the month.

Categorizing Your Expenses

To start, create two lists: necessary expenses and non-necessary expenses. Necessary expenses are fixed amounts you pay every month, such as rent, utilities, and insurance. Non-necessary expenses include groceries, entertainment, and miscellaneous spending.

Setting Realistic Budget Amounts

Find the sum of your necessary expenses and add it to the sum of your non-necessary expenses to find your total expenses. Your total expenses should always be less than or equal to your monthly income. If your expenses exceed your income, you’ll be in a deficit every month.

Tracking Your Spending

Create tables for your non-necessary expenses and update them regularly to ensure you’re staying on track. This will help you identify areas where you can make adjustments to your budget.

Practice Leads to Perfection

As you track your spending over time, you’ll become more comfortable with your budget and may eventually want to explore budgeting apps. Remember, it’s okay to make mistakes – use them as opportunities to evaluate and adjust your categories.

Budgeting is a Journey

There’s no one-size-fits-all approach to budgeting. Your allocations can change month-to-month, and it’s essential to be flexible. With time and practice, budgeting will become second nature, and you’ll be better equipped to manage your finances with confidence.