Just like you know how to put gas in your car, where your air pods are, and how to work your Keurig, you should know how to control your money! Money is a tool.  A budget is a plan for your money. Without a plan, your money controls you instead of you controlling it. Here are some steps to get you started: 

  1. Track your expenses for 3 months. No rules, just keep track. 
  2. Sort those expenses into categories. Things like: Eating Out, Groceries, Pet Care, etc. 
  3. Figure out your average monthly expense in each category.
  4. Now label each category as one of the following:
    1. Obligations (things you must pay, like debt or tuition), 
    1. Needs (stuff you need, like electricity, groceries, or internet if you work from home), and 
    1. Wants (all the other stuff). 
  5. Add up all the averages. Is that more than your net income? If it is, then it’s time to downsize. Start with things labeled “wants”. Can you downsize those to fit the whole picture into your income? If you still need more, move on to “needs”. You might try shopping for new car insurance, getting on a budget plan with your utility company, or buying a gift card to the grocery store you prefer. When it’s empty, time to get creative with what’s left in the pantry!

A word of encouragement related to Step #5: Think about the kind of life you want to have. Don’t restrict yourself in certain areas because you feel like you should. If you want to spend $300 a month on clothes, that’s okay, but recognize that you may have to give up money in other categories to make that a reality. Ask yourself what you really want and arrange the maximum amount in each category accordingly. 

  • Once you’ve whittled down your wants and needs so all expenses fit within your income, that’s your budget! Continue keeping track of your expenses. There are many apps and software programs that can help with this (like, Mint.com or EveryDollar). You could also build a good old-fashioned spreadsheet. 
  • Review the averages every 2-3 months. Maybe you’re consistently overspending in 1 or 2 areas? Then see what you could wiggle around in your other categories to make more room in the ones where you spend more. Maybe it would be helpful to be more specific in certain categories, so you can more easily expose overspending. Remember that 2-3 months is a long time in budget world. So, keep an eye on things and don’t be afraid to rework it if it’s not working for you. 
  • Don’t forget to factor in savings. If you have goals you’d like to save towards – either short-term or long-term – fit those into the budget. Then you’re managing your present and making steps toward the future! 

Remember that your budget is YOURS. Don’t let outside influences pressure you into making it look a certain way. You do need to pay your bills, but even those can be different from household to household. Your budget is a tool, not a millstone around your neck or a cage for your spending. It’s a way for you to get in control of your money and get some financial freedom!   

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