Budgeting. What comes to your mind when you think of budgets? Maybe just something else you would have to find time for in your already overbooked scheduled.
What if I told you that I have found the cure for the disease that has you have been suffering from for years? Would that make you happy? Would you want to find out all you can about the cure? Well, I have news for you. There is a cure for your “disease” of debt. It’s called budgeting. But the cure will only work if taken as directed. I call debt a disease because it can literally take your health and happiness from you. One of the symptoms of debt is overspending so the cure will address this issue.
I have found over the years that the term budget seems to be unfamiliar to many people. Simply stated, a budget is a plan for your money. A budget shows the money coming in to your household and the money going out of your household. Often, people know what money comes in but they really have no idea of how much is going out. In some situations it’s as if there are leaks somewhere and money is just disappearing.
What I would like for you to do today is to make a list of all your monthly expenses. In other words, list all monthly bills such as House payment or rent, utilities, cable, phone, insurance, groceries, savings, charitable giving, etc. Everything should be listed and I do mean everything, even that one pack of gum. If you spent $4 on a specialty cup of coffee one day, include that in your food budget. Don’t forget to include items such as Netflix, Hulu, Life Insurance, bank fees, or any recurring expense that you may not think is important. Sometimes it’s the small expenses that allow money to leak out of your budget unnoticed.
Next, I would like you to take a look at a budget form under the Budget tab entitled “Zero-based Budget Template.” The form has a tab for each month that can be found at the bottom. As you can see there are categories for Housing, Utilities, Charitable Giving, Saving, Personal, etc. All you need to do is enter your amounts in these categories. If you don’t see a category listed, you can add a new category. The template is set-up to calculate the totals for you. The object of a zero-based budget is to allocate all money so that you have a zero balance at the end of the month.
Each month you will need to complete a new budget. Some category totals do not change because they are what we call “fixed” expenses meaning they stay the same each month. Other items may change from month to month and these are called “variable expenses.” Just complete next month’s budget for now. At the end of the month, go back and see how accurate your budget was. If you over-allocated in some categories, you can make adjustments for the next month. The same goes for under-allocated categories. Remember that unexpected things can and will happen that will change your budget.