It is almost the New Year, which means it is time to start making those New Year’s resolutions. Money is usually one that comes up for most households, especially if they are suffering from a financial hangover after the holidays. Maybe setting financial goals, building a budget that works for you or just figuring out where your money goes every month is on your New Year’s resolutions list.
I know budgeting can be scary, especially when you have never done it before. Do not let fear stop you from making your money work for you. It is the things that we work the hardest for that will reward us the most.
If you have been turning a blind eye to your finances, it is time to saddle up and gain control over your finances. I ignorance can be bliss sometimes, heck there are many times that I neglect creating a budget but those are always the times when disaster strikes. I have no idea how much money we have, how much I spent on groceries, and where I am with my debt repayment plan. I am going to assume that because you are reading this, you are ready to figure out finances and how you can make your money work for you.
This will not be easy. This will require changes, some big and some small, but changes nonetheless. Change is always a little terrifying but life has seasons and with its seasons comes change. We cannot expect anything to get better if we do not make positive changes in our lives.
To help you figure this out, I have created a free printable for you to download! This is my Beginner’s Guide to Budgeting Worksheets which is only four pages long and will help you set up a basic budget and will help you ask yourself (and your spouse) some serious questions about your budget.
The Step-by-Step Process:
1. Assess your income and fixed expenses
Once you have printed out the Beginner’s Guide to Budgeting Worksheets, gather up all of your bank statements, checkbook register (or other expense tracking system), bill statements, and any other financial information that you think may be relevant. Sit down (with your spouse if you are married), start crunching numbers and complete worksheet number one.
2. Assess your variable expenses
I like shock and awe. Back when I was in financial trouble, when I created my first budget, I was appalled to see how in the red I was. I knew I was in trouble but I just did not know by how much until that moment. Therefore, I suggest you print two copies of worksheet number two and one the first worksheet, write down all the variable expense and totals from the previous month.
Compare those totals to your Income minus Fixed Expenses. Is your variable expenses number higher or lower than your total income after subtracting fixed expenses? If it is higher, you have a problem and need to make serious changes to the way you spend your money. Being in the red means that you run out of money before the end of the month and may have to borrow money from savings, a friend, or pay on credit in order to survive. This was my life for years before making that first budget.
The key to success is to try, and to try again. Now that you have given yourself a little shock value of exactly how you have been spending your money, it is time to create a budget for your variable expenses that actually makes sense. Remember the total, Income minus Fixed Expenses that you determined before? Your variable expenses cannot exceed that number; therefore, create your variable expenses budget around that number.
3. Add it all up
Now that you have created your budget, add up the numbers to make sure everything is in balance. If it is not balanced, go back and repeat steps one and two until you get the numbers to balance out. If there is an expense that is eating up so much of your budget that you cannot get the numbers to balance, it may be time to get rid of that expense. If it is an expense that cannot be easily thrown out, find other expenses that you can cut until you have your budget in balance
Worksheet number four is all about asking yourself and your spouse (if applicable) honest questions about your budget and money management. It might seem weird to ask yourself these questions, but I promise you that they will help you gain insight into how your money works and what it is that you really want out of your budget. Do not skip this part.
I may have an accounting degree, but I am not financial planner, I am just girl who has failed more times than she can count with money. If you feel you need a more computerized approach to budgeting you can try Mint.com for free or YouNeedaBudget.com for some awesome computerized budgeting solutions.
Put into practice those financial New Year’s resolutions today and make a commitment to stick to them throughout the course of the New Year. Your family will be in a better place financially once you do.
Do you set New Year’s Resolutions for your finances?
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