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No matter what time of year, it’s ALWAYS a great time to sit down and start budgeting.  I know budgets are stressful for most folks, just the word causes anxiety. Getting started with your first budget though is actually really simple!
Let’s take a quick approach to getting started that will hopefully be low stress too.
5 Simple Steps to Create A Budget
- Â Create A Goal
This is a funny place to start, but goals are huge. Â They keep us going with times are tough and become our light at the end of the tunnel. Â As you start your budget I urge you to come up with a goal that will keep you going. Â It can be very practical, like pay off all our debt, pay off the house etc. Â It can also be fun… If we can save an extra $2,000 we will go to Disney World. Â Yes you can put all that money in savings, but if we never let ourselves eat dessert our diet will fail. Â So reward yourself with a great goal that is affordable for your family. - Analyze Past Spending
Look at your expenses from last month and assign them to one of a few categories.  Also ponder any payments that you make yearly so that they aren’t missed (car taxes, insurance payments). Here’s a free download from Dave Ramsey that might help.To help you analyze spending every month try out a free program like Mint.com.  You hook it straight up to your bank account and it will categorize everything you spend.  It also has a budgeting tool built into it.  Can’t get more simple than that (and remember it’s free).
Tip: If you run upon something that doesn’t fit into one of these categories, that should be your first red flag that it’s not a necessity.
- Figure Up Income
You looked at everything you were spending. Â So step 2 is to figure up exactly how much money you have coming in. Â What is your monthly salary? Â If you earn commissions then you need to look at an average from last year. Â Never get wishful on this step. Â You don’t want to start off killing the budget, so base any income off previous years if you are uncertain on exact numbers. Â Hopefully you’ll have a great year, that will just mean extra savings in the end! - Start Cutting Where You Can
If you are like 85% of Americans the numbers from step #1 and step #2 aren’t going to match up.  This is where the hard part comes in… you need to take a good hard look at where all your money is going and make some decisions on what to change.  The biggest question to ask yourself is “Do I need this or want it?”  The basics of life are needs, are you clothed, fed, warm and dry?  Beyond a place to sleep, food to eat, transportation, and basic clothes pretty much everything else is a want. - Everything Not Used Is Saved
Remember the goal in step #1? Â To meet that you need to make sure that extra money in your budget doesn’t end up in the dreaded “cash” category. Â That just means it was money you spent without thinking. Â Any extra in your budget needs to be put into savings. Â Most financial planners will urge you to work towards having 6 months income in savings.
Some Possible Areas to Cut/Reduce
Cable  – try a smaller shift to Sling TV if you can’t do without some cable, starting at $20 a month
Phone – go to a prepaid plan, or join up with family members to reduce your bills significantly.
Eating Out – Try to reduce this section as much as possible for even a month. Â If fast food is a problem, download some of the mobile apps that give you free food and coupons.
Clothing – shop consignment or used for kids as they outgrow things, and see if you can make do in your own wardrobe for a bit. Â To add some change, grab little things like a new scarf to make an outfit feel new.
Electricity – Try Budget Billing on your electricity and water bills. Â This averages your bills from past years and you pay the same amount every month. Â It doesn’t save you money, but does save you the heart attack of a summer electricity bill.
