How To Create A Budget That Actually Works

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This post is all about how to create a budget that actually works for you.

With so many budgeting methods out there and so many reviews and opinions, it gets really overwhelming when it comes to choosing the right method for yourself. You know, when you ask yourself first, how to create a budget that actually works for you, it really does sound super overwhelming. You don’t really know where to start at all.

All you want to make is that you find a budget that you actually can enjoy and stick to consistently month after month.

You may wonder how to create a budget that actually works for you instead of against you.

Trust me I’ve been there!

As a matter of fact, I thought I would never be able to make a budget that actually works for me until I did a little research on the different types of budget methods out there.

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What Are The First Steps That You Need To Take

Step 1: Go Through all of Your Expenses

For starters, the first step you need to take in order to find out how to create a budget that actually works for you is that you want to look at all of your past expenses.

This you do by going through all, and really all of your expenses of the last three months. Now when you do this, you have to be really honest to yourself in this process as you won’t be able to ignore your habits anymore.

You can print all of your statements and go through each line item to build your categories and see where you spend most of your money.

Step 2: Categorize all Expenses Starting With The Most Important

Next, the second step in order to find out how to create a budget that actually works for you, is that you’re going to want to categorize all of your expenses appropriately. You want to focus on your MOST IMPORTANT expenses first.

These include but are not limited to:

Mortgage or rent
Electricity
Water
Land / property taxes
Groceries
Gas
Car
Other necessities

Especially when paying off debt, you will most likely want to postpone any and all activities that cost you money for a while. At least until your debt is much more manageable and you can actually afford activities.

Step 3: Choose and Use the Right Budget For You

The third step on how to create a budget that actually works for you is when you start doing some research on all the different budgets out there. You want to make sure you chose the right budget for you. One that actually works for you is very important, since it is you that is going to start managing your money, you need to find a method that works well with how often you are being paid and how your bills are structured in any given month.

Choosing the right budget for you can be tricky but it actually doesn’t have to be!

What you want to make sure is that you will choose a budget method that you are going to stick with and not chose one that you will lose interest in or find after a while that it is too time-consuming to manage your money.

How to Find the Budget That Actually Works for You

How to create a budget that actually works for you is never really easy for anyone.

Most people have it difficulty when trying to find the right budget. But, it really is the first thing you need to do when you are committing to managing your money.

When I started budgeting, I looked at how other people budgeted their money and what methods were working for them but also which methods were not working for them.

The great thing about today is that you can look up everything on the Internet. When I did my research, I came across the zero-based budget.

A zero-based budget is when you assign each and every dollar you spent. It means that each month, your income minus your expenses equal zero.

All of your expenses have to be assigned which means that you will know exactly where you money is going.

So for example if you get paid $3000/month, then you will subtract every assigned dollar until you get to zero. This will include ALL the expenses whether they are needs or wants. Anything and everything from birthdays, fun money to giving and fixed expenses.

The Zero-Based Budget

1. Write down your monthly income.

You can use Excel or a budgeting app, or you can simply stick to a paper-based budgeting planner. Usually, I prefer the pen and paper method as I am old-fashioned when it comes to these sorts of things. You can also use both digital budget planners and a physical budget planner if you like.

Look at the income you receive. Do you receive your income weekly, bi-weekly or monthly? According to your pay schedule, you will most likely budget as well.

2. Add any seasonal expenses to your budget as well.

This is important because you do want to plan for those and not have them come up as “unexpected” expenses. If you can plan for these, you can save for them, and once these special occasions come around, you won’t have to worry because you will have included these expenses in your budget already.

Seasonal expenses are for example, car maintenance or renewal fees for your vehicle. Easter, Christmas and birthdays as well as vacations and any other holidays you celebrate are also seasonal and should also be planned for accordingly.

This is where you would start for each of the categories sinking funds. Sinking funds will help you plan for those seasonal events as you start saving early on and contribute monthly to that savings goal by including it into your budget.

You save money for these events throughout the year and once the event happens, you have the funds available at your disposal. Once the event has passed, you will start filling up that sinking fund again until it comes around next year again.

The great thing is that you will never fell like you have to scramble for money or stress out because you did not anticipate an expense coming up. Also, you won’t have to ever use your credit cards because you will have the money available to you!

3. Subtract all your expenses from your income.

Once you have added all of your expenses including your sinking fund categories that you save for each month, you may go ahead and subtract all the expenses from your income.

Expenses also include anything you want to put away for your retirement, investing or your child’s education, or health emergencies.

The zero-based-budget literally includes everything and anything. Once you have gone ahead and done that, you are left with zero which is our goal with the zero-based-budget.

Your Budget Has To Be Effective and Realistic

When you are asking yourself, how to create a budget that actually works for you, you need to make sure you create a realistic and effective budget. Your goal is to stick with it in the long run, so finding one that fits your lifestyle is very important.

Sticking to your budget is probably the biggest hurdle when you want to really manage your money. Most people fall back into their old habits if they do not really go after what they want. You need to know your WHY in order to keep going, even when times will tempt you spend your hard earned money.

You will need to prioritize and make sacrifices in order to stay the course. We all know how easy it is to quit something. It’s the very few people who reach the top by staying consistent in whatever they choose to do or work on for themselves.

You must constantly track your spending and have complete control over your money. You may adjust from time to time but overall, you will have a good budgeting routine down in a matter of a couple of months.

Each month you have to sit down for a couple of minutes and go through all of your expenses. You will look at whether you went over budget or whether your budget was right on track. If you continue to do this at the beginning or end of each month, soon you will notice that you can budget in no time.

Not only that but you will see your savings rise, your debt diminish and overall find yourself in a better more secure place. You will not be surprised when emergencies come up for which you might have to pay. You will feel prepared when it’s Christmas or someone’s birthday. You won’t feel embarrassed because you do not have funds to partake in social activities and you won’t have to use your credit card to pay for that vacation.

What Happens If You Are Being Paid Sporadically

How to create a budget that actually works for you, if your income is sporadic is another challenge.

If your income is sporadic, then the zero-based-budget will still work for you.

You need to make sure to always budget on the lower end of things. It’s best to give yourself a bigger buffer when your income is sporadic. Keep your spending habits to a minimum and try to live below your means.

When you live below your means, take control of every dollar you make by having it assigned to something in your budget, you will make great progress no matter whether your income.

As has been said many times, it’s never about how much you make but how much you keep at the end of the day, and with a zero-based-budget, you can see that it will work.

READ: LEARN HOW TO MAKE EXTRA MONEY BY STARTING A BLOG

Why Is The Zero-Based-Budgeting Method Going to Work

The zero-based-budgeting method is going to work because

You assign every dollar
You create categories that are important to YOU
You save automatically for what you need to
Your emergencies are covered
Any special events are no longer a surprise to you
You have a financial snapshot of all your transactions each month
You are completely in control of your money, consistently

CONCLUSION: HOW TO CREATE A BUDGET THAT ACTUALLY WORKS FOR YOU

Finding a budget that actually works for you is easier done than you think. Remember, you are the boss of your budget and in control of your money. Not the other way around.

The most important thing is to stick to the budget once you see it’s working. The zero-based budget is one way to budget your money among many other budgets. However, it has worked for many people because of the very simple fact that every dollar gets assigned and no dollar is left to be wasted.

You will see that creating this kind of budget can very likely work for you especially if you stick to it consistently month after month.