Budgeting plays a key role in your financial life, or should do. They are a simple method of organizing outgoings, managing expenses and ensuring you always know what’s coming in and what’s going out. They can literally be the difference between managing and not.
That’s why we talk about them so much. If you’re managing loans, budgeting is essential.
If you don’t budget already, here’s how to create a household budget without spending hours in a spreadsheet every weekend.
You will need to spend hours in a spreadsheet to begin with though.
Paint the picture
The initial setup of your budget is the time-consuming part. Running is week to week is easy.
First you need to create a spreadsheet either on paper or on computer. Enter your household income in one column and outgoings in another.
List all your bills, groceries, gas and any other expense in that outgoing column. Hopefully, the total should be less than the incoming column.
Examine those outgoings
Take a long hard look at your outgoings. Chances are, you see some you didn’t even realize were there and some that really shouldn’t be there.
If you need to make savings, identify optional outgoings and begin culling them. Start with the least painful and work your way down the list. Try not to create too much hardship otherwise you are much more likely to lapse.
Take this as far as you want. As long as you end each month in the black, you’re good to go.
Set up a savings account
If you don’t already have savings, now would be a good time to start. Identify an affordable amount each month and set up an automatic payment from your household account to the savings account. Set the payment day for the day after payday. That way the money is gone before it’s spent.
It doesn’t matter if you set it for $20 or $200. Even modest savings are better than none.
Once you have a few thousand in savings you can consider long term savings. Keep that original savings account as a rainy day fund and anything you save over that as long term savings. It may be a slow process but over time you will see those numbers increase.
Budgeting requires discipline but also flexibility. There will be times when something happens to upset the budget. The car breaks down. The boiler stops working or the kids decide they all want to play the cello.
It’s in these times that you must be flexible enough to adapt and make those payments or eat into your savings. Life happens and the easier you can adapt to unexpected expenses, the happier you’ll be!