Creating a budget is something that many people want to do, but some don't know where to start. That’s why I created this guide to help you create a budget. Your budget may look completely different than someone else’s because creating a budget is personal to you! We've created tons of budget planners and cash envelope inserts to choose from to make your budget journey easier!
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1. Bank Statements
Your bank statements are going to show you everything you need to know about your spending habits (unless you pay only cash).
I highly suggest you get at least 3 months worth of bank statements from every account (debit and credit) you have in order to get a better overview of your finances.
Go through line by line and put your expenses into categories. Note: these categories may work best for personal finances.
- Housing (utilities, repairs, insurance, etc.)
- Food & drink (groceries & eating out)
- Medical expenses (doctor, prescription, medical supplies)
- Work expenses (mileage, clothing & shoes, donations, etc.)
- Entertainment (movies, parties, hobbies, etc.)
- Subscriptions (Netflix, Hulu, Amazon, etc.)
- Transportation (insurance, car note, repairs)
If you pay cash for anything or want to match receipts with bank statements this is when your receipts are needed. You can go back as far as you like, but I recommend at least 3 months to get a better understanding of where your money is going.
3. Get Your Phone Out
There are so many helpful apps out there to help you get your finances in check. In order to keep it simple here are the apps I recommend:
- Calculator || This app needs no introduction but it’s essential for creating a budget. Take all of your bank statements and receipts and add all of your expenses according to your categories. (Make note of any refunds, which is why you may need to subtract from spending totals.)
- Percent Calculator || Easily calculate what percentage of your income goes where each month. I also love this app to calculate sale discounts.
- Buddy || If you’re someone who prefers to use an app instead of pen and paper this is a good one, easy-to-use and the reports look pretty too!
- Budget Planner || This is for those of you that are more of a pen and paper kind of person. This Budget Planner has everything you’ll need to create a budget and help you stick to it.
4. The 50/30/20 Rule
Follow the 50/30/20 rule in order to help take control of your finances.
50% of your income goes towards necessities such as:
- Food & water
30% of your income goes to wants such as:
- Clothing (this may also become a need)
20% of your income goes towards savings such as:
- Emergency fund
- Retirement fund
- College fund
- Debt repayment
- Company 401K
5. Set Financial Goals
If you’re wanting to create a budget I would imagine that you already have some sort of financial goal in mind.
Whether that’s to purchase a house, save for college, or become debt free having financial goals not only help you work towards a goal, but they could give you the motivation that you need to stick to your budget in order to accomplish your financial goals.