The 411 on Creating a Budget

Start budgeting today to manage your money wisely.  Creating a budget is a simple and effective way to gain control of your pocketbook.

An alarming two-thirds of Americans do not have a budget in place.  Unfortunately, managing money is not something that most learn growing up.  Maintaining a home budget can reduce stress and allow you to live within your means.  Start today by reading how to create a budget.   Piggy bank on calculator concept for saving, accounting, banking and business account

What is a budget and why is it so important?

Let’s all agree, adulting is hard.  Can I get an amen?  Life can get overwhelming and we can become consumed on how much we have to do on a daily basis.  Finding the time to manage your money and create a budget can seem like the last thing on your to do list.  First, let’s take an honest look at what a budget is.  A budget is simply a spending plan for your money.  It is an itemized list of where your money is going and a balance of your expenses and income.  It is crucial to have a monthly budget for your home and each paycheck period.  This allows you to track how you spend your money, correct any errors, and plan for the future.  Creating a budget is vital so that you know you are not spending more than you are earning.  Those that have budgets are much more financially secure than those that don’t.  Managing your money well can prevent you from going into unforeseen debt and also allow you to have money leftover to do the things you’ve always wanted to do.  Plus, once you have created a budget, you will feel empowered.  You will have much more control over your spending and feel a sense of ease instead of living your life paycheck to paycheck. Check out America's Best Bookkeepers

Take an honest look at your income and expenses.

Let’s get started.  The first thing you are going to need to do is get organized.  If possible, gather all of your information such as pay stubs, receipts, monthly bills, credit card statements, savings accounts, student loans, etc.  It is important to know exactly how much you are bringing in each month. If you are paid on a salary scale, it is much easier to know this right off the bat.  If your income is not steady from month to month, you will want to calculate an estimate of the average income you are making so that you have a clear picture of what you are bringing to the table.  Go back six months to give yourself a conservative estimate of what you can expect.  If you have a joint account with a spouse or a partner, your budget will much more successful if you do this together.  Next, make a list of all of the necessary expenses that you are responsible for on a monthly basis.  This will be things such as mortgage/rent, utilities, car payment, childcare, average grocery bills and cell phone bills.  Open up your checking account online to see if you’ve missed anything.  It can be easy to overlook something, especially if it is automatically debited from your account.  Once you’ve created this list, come up with a total and note these are your priority.  These are the things that you must pay first before spending on anything else.  Now, subtract this total from your monthly income.  What you have left, if anything, will be most important in creating your spending plan.  Knowing how much you have leftover each month after the prioritized items are deducted will allow you to see the truth on where your money is going.    

Take control of your spending habits.

Now that you have taken an honest look at how much you are making and what your essential expenses are, let’s see where the rest of that money is going.  The fact is, most of us don’t know why we keep coming up on empty each month when we are making a decent earning.  Let’s go back three months and jot down all of your extra expenses such as eating out, entertainment, and shopping.  These are what we would call luxury items.  Purchases that may seem small at the time can add up quickly.  Here’s where you can feel empowered.  Take a look at reality and determine how much you actually have to spend on these luxury items.  Do you need to eat at home more?  Or perhaps, cut back on a few of those extra Target trips?  It is easy to get out of control when you don’t know how much you have to spend.  Categorize these items and compare them with how much you have left in the bank after all is said and done.  Conservatively determine how much you would like to spend on these categories and put a monthly cap on them so that you know you are not overspending.  Then, consider how much you would like to save each month and where you would like that money to go.  We will discuss this in another article.  

Time to take action with a budget planner.  

There are several ways that you can keep track of your budget now that you know how and where you are spending your money.  Honestly, looking online for a budget spreadsheet can be overwhelming because there are so many options out there.  It can be difficult to determine which is best for you.  Keep in mind that this should be an easy process.  If you make it too complicated, you are far more likely to fall off the wagon and get distracted.  So, keep it simple and easy so that you can maintain it daily.  Here are three recommended ways to manage your budget with ease and comfort.
  1. Microsoft Excel.  If you happen to already own Microsoft Excel, this is a wonderful way to create a budget.  There are numerous preset budget templates that are user friendly and, best of all, free.  Choose the budget spreadsheet that is right for you.  Entering your information is easy and will allow you to track your spending each month.  
  2. Budgeting Phone apps.  The saying is true, there is an app for everything.  There are a variety of different apps that allow you to enter and keep track of your budget daily.  Some are free and some come with a fee.  We will look at and compare some of the best apps in another article.  
  3. Quicken.  If you really want to get sophisticated, Quicken is a household finance bookkeeping software that allows you to track your spending, investments, and save for the future.  This will allow you to dig in and get to the nitty gritty.  It can also be much more detailed so it is up to you on how much time and energy you to want to spend on creating your budget.
You’re all set and on your way to creating a budget!  While managing money takes a little time and effort, in the long run, it sets you up for a more financially secure future.  Congratulations!   About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.