As a first-time budgeter, there may be several reasons why you haven’t created a budget up until this point. Maybe you didn’t think you need one or weren’t sure where to start. Here are some tips on how to create your first budget and how to stick to it.
COME UP WITH GOALS
What are you hoping to achieve with your budget? Do you want to save money? Are you wanting to pay down debt? Do you want to reduce what you’re spending? Having a solid goal in place will help you decide how your budget is organized later.
LIST ALL INCOME
The second thing you need to figure out is how much you are bringing in each month. If your income isn’t regular (ex. hourly, freelance, etc.) take what you brought in during the last 6 to 12 months and find the average.
LIST ALL DEBT
You will then need to figure out where your money is going by listing all your debts. These can be organized into two separate categories: fixed and variable. A fixed debt is something that you pay consistently that never changes, for example, your monthly mortgage payment. A variable debt is a debt that may change from month to month, such as a credit card bill.
TRIAL AND ERROR
As a first-time budgeter, there may be some growing pains associated with living on a budget. If you slip up here or there, don’t be too hard on yourself. If you find yourself consistently slipping, the budget you came up with may not be the best situation for you. Remember that what works for one person may not work for you and that’s okay.
Making drastic changes to your spending habits all at once usually isn't a recipe for success. To start, select one area of your budget where you would like to spend less. For example, start with how much you spend on groceries. Make it a goal for the first few months to spend $20 less than you usually do. After getting into the habit, make it $50 and so on until you reach your ideal spending place.