Building a Better Budget

So why haven’t you started building your budget?

I’ve found out that most people won’t start a budget simply because of FEAR! People fear what they don’t know or what they don’t want to know. If you are finding yourself stuck in the pay check to pay check cycle or always saying you’re broke, it’s time to create a budget and find out exactly what your money is tied up in. We all have dealt with FEAR in some area of our life whether it is trying to be physically fit, starting a new job, or trying out a new business venture. We all want to know one thing…will it work? We are scared of failure, and we’ll make up all types of excuses as to why it won’t work and before you know it you have talked yourself out of something great. I know it to be true because I did the same thing while trying to start this blog.

Another reason why you may fear creating a budget is because it forces you to take responsibility and become disciplined. At that point you become a conscious spender and you start thinking about everything you buy and spend your money on. You’ll start thinking twice about even buying a soda out of the vending machine every day at work because that $1.50 starts to add up, and you start to realize that your budget allows you to only get a soda twice a week instead of everyday. Habits are hard to break. It all boils down to how bad do you really want to reach your goals?

What does a budget consist of?

Simply put a budget should consist of income and expenses. What’s going out should never be more than what’s coming in. Basically a budget is a tool to help you spend your money in the most effective way possible. One of my job responsibilities as an internal auditor is to analyze waste and help departments run more efficiently and effectively. A budget works the same way. You want to analyze how your money is being spent each month and eliminate wasteful spending all together.

Getting Started

Starting a budget is simple. There are plenty of apps that help with building a budget but a lot of them are not free tools, so unless you are making a whole lot of money and have a whole lot of expenses, I personally suggest building your budget out on paper first. Creating a budget manually whether in excel or on paper allows you to really get involved with your finances and create a budget that is just for you. Start by identifying your monthly net - income first. This includes all sources of income including full and part time job pay, child support, income from rental property, etc. Then jot down all of your monthly expenses. This includes but is not limited to the following:

· Rent/ Mortgage

· Utility bills

· Insurance ( Renter’s, mortgage, condo, car, health etc.)