As the name of my own blog may imply, I highly value budgeting. I never had a problem managing my money, but our budget keeps us on track. Plus, for anyone having financial issues, creating a personal budget can be the first step on the road of financial freedom. Here are a few steps to get you started.

List your Income

You need to create a list of your total monthly income to know what you have to work with. This means totaling up the income that you have coming into your accounts on a monthly basis. This is the amount you will use to budget. If you have irregular income, remember to budget using the lowest estimate possible since you rather have something left over than not have enough to cover your regular expenses and goals.

List your Goals

Have you ever heard of “paying yourself first”? In order to hit savings targets or to pay off debt as quickly as possible, you will need to budget in for those goals. I list them in my own budget just like any other recurring expense (explained below). By prioritizing our goals, we hit them every month.

List your Recurring Expenses

Add up all of the expenses that you have to pay on a monthly basis. You can list the big bills first like the mortgage/rent payments, car payments, insurance bills, and credit card bills. Since this is where the bulk of your money is going and these expenses will stay the same month after month, they will be the easiest to include in the budget.

List your Other Expenses

Next, make a list of all of your expenses that vary from month to month. This may include utility expenses, cell phone bills, entertainment expenses, food, and gas. Since the amounts of these expenses are not fixed, you will need to estimate what each will be per month. You can use old bills and statements to get a ballpark estimate as to how much money you should allocate to these bills in your personal budget. For expenses, I would suggest estimating high.

The Extra

The last step is to determine the amount of money that you have left over once you pay yourself and all of your fixed and variable expenses. If you have money left over on a monthly basis then you are operating with a surplus that you can redirect as you’d like. We divide our surplus up between savings goals and entertainment accounts. If you do not have money left over each month then you are operating in a deficit and need to increase your total income or cut some of your expenses. I’d suggest looking at your biggest expenses first since they make the largest dent. Most of the time, this means looking at your car and transportation costs and then evaluating any regular expenses like daily habits or your variable expenses.

I’ve been keeping up with our budget for more than 5 years now. It helps us pinpoint problem areas before they get out of control. It also makes me feel better to know exactly where all of our money is going.

Do you have a personal budget?



Crystal Stemberger uses Budgeting in the Fun Stuff to write about finding the balance between paying your bills, saving for your future, and budgeting in the fun stuff along the way.