How to start budgeting - life on the dough

How to Start Budgeting (Even When You Suck At It)

This is probably not the first time you’ve gone through an article or a document about budgeting. You’ve been trying to budget for so many months, or even years, but you can’t just seem to get it right. You need a procedure to follow – something that will make you stick with the plan for a very long time. Well, that’s what we’re about to look at here. So, grab a notepad as I teach you how to start budgeting even if you’re a big spender.

Getting Started

You’ve been looking through so many articles on how to start budgeting, but nothing has worked for you.

Why is that?

So many available resources only give you the general knowledge of how budgeting works. You split your money when you receive it and just make sure you don’t touch what you’re not meant to touch – even though no one will chastise you for it.

We all know budgeting is not that easy.

One slip up and we’re spending all our money, only to regret it at the end of the month.

Here, we’re going through processes you MUST follow. We’ll be starting on paper because it is easier to get through things when you write them down with your hands.

How to Start Budgeting: Step-By-Step Procedure

1. Calculate Your Income

You can’t budget if you don’t know how much comes in monthly. Regardless of the type of job you do, you need to have an estimate of your monthly income.

If you have a 9 to 5 job that is your sole source of income, then this will be very easy for you.

Get out your notebook and write down your income.

However, if you are self-employed or you run several side gigs that make your income irregular, you can’t just put any amount down, else you’ll ruin the budget the month you don’t earn up to that particular amount.

Instead, write down your income for the last 5 to 7 months.

You’ll notice if your income has been rising or falling (or if it’s just somewhere in between).

Pick the lowest income for those months and write it down. That’s what you’ll be sticking with. You can choose the number of months to examine depending on how much you make monthly.

For instance, if you made $1,000 six months ago, and now you make $4,000 monthly, you may not be able to use your income from six months ago, because it’s smaller.

So, instead, you can pick the lowest income from the last two or three months.

If you are looking for ways you can increase your income monthly, I’ve compiled a list of side gigs you can look into.

2. Create Your Budget Outline

After calculating your income, you’re going to be drafting your monthly budget.

I suggested that you do this by hand because you can easily include things you forgot along the way in the rough draft.

Create a headline on the paper stating the month of the year (e.g. December 2020 budget). Under that, write down the income you calculated and your pay date(s). If you’re getting paid three times a month, write down these dates.

Break down the income you receive by the date(s) you’ve listed.

Then, under these dates, you list the expenses you need to settle with the money. Include the name and amount. Make sure you list all your bills.

It’s possible you forget some expenses, so you can leave it for a while and return to it. But, don’t leave anything out.

How to start budgeting - the pen on paper method
The Pen and Paper Method

3. Remove a percentage for savings

I always tell everyone to save money before planning a budget, because it is so easy to include those savings in the money you’ll be spending during the month.

However, if it is safely tucked away, you won’t be thinking about that money.

So, you can decide to save 30% of your income and budget the rest.

That should be another category under the income section on your sheet.

Subtract this percentage from your total income. That’s what you’ll be working with.

4. Budget for Groceries

This is not where you limit your grocery spending. We’ll be doing that later. Firstly, you have to write out how much you’ll be spending on groceries.

To know the right amount, calculate what you currently spend – a weekly and monthly calculation based on how frequently you shop for groceries.

Write down the total amount and add it to the bills you calculated two steps ago.

Then, subtract the total expenses from the leftover after removing your savings.

You may have a problem if your grocery budget is too high and will take up all your income. But, you can solve this.

If the amount you calculate for groceries is over $1,000, cut off 20%, so you’re left with $800.

If what is left is still too high, you can keep cutting it off. However, I don’t want you to rush your budget or change your lifestyle drastically, as that might prevent you from sticking to your budget.

So, what you’ll do now is take a look at the things that caused the grocery budget to be so high. Ask yourself these questions:

“How many times do I eat daily?”

“Do I eat out?”

“How many times do I eat out and how much do I spend on each?”

When you can get these answers, you’ll know where to make those little changes. As I said earlier, you don’t want to do things in a rush.

So, you’ll just make little cuts.

If you’ve been eating out five times, you can reduce it to three times and save more money. When you take baby steps, long-lasting changes are guaranteed.

5. Cut Down More Expenses

When budgeting, you’re not going to spend as much as you used to. The main purpose of budgeting is to save money.

So, you will be making the necessary changes that will reduce your current bill amounts.

First look at everything you’ve listed out on the paper apart from the groceries you just worked on.

How much do you spend on transportation monthly? Can you cut it? How can you cut it without stressing yourself out?

Maybe you could exercise by walking on some occasions.

Other cases include using the library instead of buying books, or cutting down on your Netflix subscription.

Pick a bill and reduce it or substitute it with a cheaper service. Then, edit those changes on your list to show the new amount.

If done right, you should still have some money left after you complete your budget. You can get a plain sheet and rewrite the final expenses down.

6. Adding Necessities

There are some things you just have to do monthly or bimonthly. Some of these include buying things like body cream, hair shampoo, light bulbs for your home, laundry detergent, garbage bags, and hand soap.

You also need to buy fuel to run your car if you have one. You can decide to include this under transportation bills or add them under necessities.

To know how much you’ll spend on them, check your previous bank record for the last 30 days. Then, add up the expenses and put down the round figure. Also, determine the dates you’ll get these items and write them down.

If you buy all these household supplies together with your groceries, you can include them under the grocery category. It becomes “Grocery and Home Supplies.”

Using a Calendar Budget

After writing down your expenses and cutting costs, you can use the calendar budget method to stay on track and organize your finances.

How do you do this?

Get a calendar from Amazon.

I’ll be using the Blue Sky 2021 Weekly and Monthly Planner to organize my budget throughout next year. It also looks good, and is cheap.

When you get your calendar, pick out your paydays as you’ve written on your list.

Then, write down your estimated income and the bills you’ll be handling with that income on the paydays.

Remember that you should have removed your savings. So, you’re working with what’s left.

Include your necessities on the calendar. Add the amounts on the pay date before the day you’ll buy the stocks.

Then if you’ll be getting someone a gift, include the amount you’ll spend on your pay date at least a month before the occasion.

For instance, if your partner is celebrating their birthday on November 30th,write down the amount you’ll spend on your surprise gift on October 15th or 30th… or the payday before then.

You’ll be using the pay dates on your calendar to track your budget.

Don’t worry, you can use the remaining days to plan your day and put down your daily goals.

How To Stay On Track With Your Budget

1. Focus on the important things first

We are all aware that there are so many things we spend our money on monthly. Some of these things are more important than others.

When writing your list of expenses, you have to prioritize the most important first. You cannot place going to the movies over paying your electricity bills.

When starting a budget, you’ll realize that it is easier to cut off money from the less important things.

You’re more likely to stay on your budget when you have enough money to satisfy yourself. If you don’t get too broke that you have to dip into your savings, you’ll be more likely to see it to the end.

Now, one of the most important ways to ensure that you have enough money is understanding priorities. “What is more important?”

List all the important expenses first… we call them needs. Then, list the unimportant ones (wants).

It is easiest to cut money from your “wants” than your “needs”.

2. Set Goals

If you don’t have any big reason for budgeting, it will be quite difficult to stick to it.

What do you need money for?”

“Why are you saving your money?”

“What are you looking towards doing in the future?”

Set both big and small goals. For instance, if you want to get a college education, you can include that as your goal. So, you’re saving a percentage of your money for college and budgeting the rest, so you can spend appropriately till you hit your goal.

Your goal could be to buy a new car or pay for an expensive vacation.

This goal keeps you focused. It gives you a reason to keep to your budget. Because if you slip up, you might not achieve the goal when you want to.

Divide your big goal into smaller goals. How much do you need to save each month and keep you on the timeline to achieve your goal?

By doing this, budgeting becomes easier.

You’ll realize that even if you eventually change your mind and choose another goal after budgeting for a while, you have enough money to get started on your new path.

Bottom Line

Writing out your expenses and managing your budget with your hands on paper is the best way to stay on track when you’re not so great at budgeting or if you’re starting for the first time.

Apart from writing it down, you can also reinforce your decisions by getting a budget sheet and filling it after organizing your calendar.

You can get Life on the Dough’s monthly budget sheet here.

If you don’t have any money left after you’ve spent on bills and necessities, try to cut down more expenses. You should have something left to spend just in case anything else comes up.

After you master budgeting with the pen and paper and calendar method, then you can go on to budgeting using online systems.

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2 thoughts on “How to Start Budgeting (Even When You Suck At It)

    1. Yes, you shouldn’t leave anything out… It also helps you know where all your money goes every month. By doing so, you’ll know how to manage your finances better

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