Budgeting doesn’t have to be complicated. Here are the 5 key things you need to create a simple budget. And honestly, if this is all you do, you will be doing better than more than half the population! According to US Bank, only 41% of Americans follow a budget. When you think about that, it makes sense that 80% of Americans also report living paycheck to paycheck.
Just learning to create a simple budget can be the first step towards breaking that cycle. It’s super easy and I’ve mapped out the steps for you below (and make sure you read to the end as there is a free template for you there!)
Create a simple budget step 1: Income
There is a lot you could do here but if you want to create a simple budget all you need to know is your take home pay. How much money is actually going into your bank account for you to use. You can use your previous paychecks as an estimate if you need to. Estimate all sources of income for the month and total those bad boys up to see how much you’ve got to work with.
Simple budget step 2: Bills
Write down all your bills for the month and add those up too. When I’m referring to “bills” here I’m not talking about gas, groceries, household stuff; I’m talking about items that have a due date. We’ll get to that other stuff in a moment. It’s important to remove the bills first before you get to anything else.
Simple budget step 3: Savings goals
Now it’s time to talk about savings goals. Savings goals are anything that you want to make sure you have money for when the time comes. Too many people make the mistake of just creating an “emergency fund” and nothing else but you need to save for more than just emergencies.
Set savings goals for things like travel, regular bills that come up annually, gifts, etc.
Once you determine your savings goals, write those things down on your budget as well, adding up your savings before moving on to spending. Do NOT make the mistake of deciding to save “whatever is leftover” – trust me – there will be nothing leftover. We are doing zero based budgeting here. Every single dollar and penny has a job. It is either going to bills, savings or spending. There is no random buffer floating around in the universe.
Simple budget step 4: Spending
Whatever you have leftover is what you have available for spending. If you have nothing left over then you need to revisit the categories above and make some adjustments.
Pro Tip: If you need to make adjustments start with bills. Can you reduce your monthly bills? (I have a jam-packed post on that you can check out here). The reason I advise starting with reducing your bills is that you have more control over what you spend that what you make. Let me say that again,
You have more control over your spending than your income.Sarah Blanchfield
So when it comes to creating more space in your budget, you should look at your spending first.
Once you’ve got your amounts right, then decide how you will be using your spending money. I find it easiest to assign categories so that I don’t accidentally spend too much eating out instead of having enough gas money.
Create a simple budget step 5: Use a template
The easiest way to make sure you create a simple budget successfully is to use a template. Fortunately for you I have one I made just for you! Following the steps above you can print this out and use it again and again. Plus, it’s free – because I know how powerful a budget can be in helping you achieve your goals I don’t think ANYTHING should stand between you and having a budget. Click below to get your template sent to you!