Budgeting
It starts with you
This guide will teach you how to budget. Budgeting is the first step of financial independence. Follow the steps below to become a budgeting master:
Track
Income and Expenses. How much money is coming in? Where is my money going?
Create
Create a Plan. What do I want to spend my money on? Can I cut unnecessary expenses?
Maintain
Regular Checkups. Is income and expenses as they should be? Am I happy with where I am financially?
Track Expenses & Income
Keep A Record
You need to start understanding your current financial situation. The only way to make sure you are spending money on the things that truly matter is keeping a record of your income and expenses. This means to track expenses and income you incur.
Some banks can keep track of this for you. If not, then you will have to keep track of your own receipts and pay stubs. You can record them by hand, in a spreadsheet, or program.

Categorize Income & Expenses
Categorizing income and expenses helps a person see where their money comes from and goes. Think about all the ways you spend and get money. Some banks can categorize your expenses. Below is a list of common income and expense categories:
Income Examples:
Job
Gift
Federal Aid
Investment
Expense Examples:
Rent/Mortgage
Insurance
Household Supplies
Food
Medical
Education
Entertainment
Home Improvements
Utilities
Highlight the categories you think you spend the most money in. After tracking your expenses for awhile you will find where you actually spend the most money in and whether you should limit yourself or split the category to find the root of the spending.
Frugality

Being frugal means to spend money sparingly. Hold back from purchasing things, especially went they are not needed. Examples of being frugal include:
– Waiting to buy a new pair shoes until the old shoes are worn out
– Preparing food at home instead of going out to eat
– Buying a used car instead of new when a car purchase is necessary
Limit Expenses
Stop spending money on unimportant stuff
What do you need to spend money on to live?
• Food
• Shelter
• Electricity
• Medication
• Household Supplies/Fixes
Limit Expenses to absolute necessities
What are you spending money not that you don’t need?
• New Couch
• Netflix
• Alcohol
• Eating Out
• Walk/Bike instead of Driving
Sometimes it may be easier to start over and get rid of all expenses except the vital living needs. Once you can afford you feel comfortable paying for vital needs you can work your way up to your wants.
Get Out Of Debt
Debt is a financial burden that will keep you away from unnecessary debt. Some debt is necessary (Home mortgage, education, etc.), but most is not. The sooner that you are out of debt the more freedom you will have with your money to use on the most important things in your life.

Why Are You Budgeting?

Give yourself a reason
Remember the reason why you are budgeting. If you don’t have a reason yet, create one. Having a motivating reason such as family, retirement, your bucket list, other life goals or dreams will be more powerful than any reward.
Create a Budget
Start Budgeting
After you track your income and expenses you are ready to make decisions and create a budget.
First: if your expenses are greater than your income make changes to your expenses (If you can change income, then go for it).
Second: Decide, what you want your money to be spent on? Do your expenses line up with your values? For example, if I don’t have enough money for a nice vacation with my family I could stop eating out two times a week and save enough money for that vacation in two months.

Your Budget's Core

To have money for the enjoyable things in life.
What’s most important to you?
Family
Adventure
Vacation
Retirement
Home
Food
Health
What to Budget
Budgeting is creating and maintaining a plan for your money. The basics of a budget is to make sure income is higher than expenses and the money being spent is going to places that truly matter.

Expenses! Limit yourself from bad habits or unnecessary purchases and save that money for more important things.
Live the life you want to live.

Savings
Saving your money can be a significant part of your budget.
Don’t know where to start?
Make a plan to obtain enough money to live on for six to twelve months. Having that much savings would help you feel comfortable in an economic or family crisis.

Emergency Fund

How much money should I have in an emergency fund?
6 months of savings is the recommended amount to have stored away in case of an unexpected economic family crisis.
Maintain a Budget
Track Consistency
The first attribute to help you maintain a budget is dedication. You must keep track of your income and expenses to maintain a budget. Regularly checking your income and expenses will help you see if your money flow is in consistent with your budget. These checks can be monthly, quarterly, or however often you want to check them.
Monthly or Quarterly Checklist:
Savings are equal to or greater than budgeted
Expense categories are equal to or lower than budgeted
Miscellaneous expenses are low to none

Re-evaluate
Every once in a while, re-evaluate your financial goals to make sure your budget is still in line with it. This evaluation can be yearly. When income level changes look at your budget and make adjustments that will reflect your financial goals.

Annual Checklist:
I’m still on track to achieve my financial goals
My financial goals are still applicable to me
Accountability
You must be accountable to yourself and have great dedication to maintain a budget. Along with remembering the motivating reason of why you should have a budget, it would be useful to talk to a friend or family member about your budget and have them check up on you to make sure you are following through with your financial goal.
Good qualities of a financial accountability partner:
Trustworthy
Thrifty
Inspiring
Compassionate
Understanding
Good at talking you out of bad decisions
Only judges based off your goals and objective

Extras
Budget Templates
If you track your money yourself I recommend finding a template (Why reinvent the wheel? You can modify it if you like later). This will help you create a budget and manage it much easier. Excel, Numbers, and Google Sheets have free budget templates that can make budgeting a lot easier.
We recommend Google Sheets out of all the spreadsheet options because of the capabilities to share the spreadsheet with others.
Click on the icon for Google Sheet budget templates. Right click on the sheet and click “Make a Copy” to make a private version on your own Google Drive.
Google Sheets
Budgeting Software
If you want software to help you manage your personal finances, we recommend Quicken. With quicken you can keep track of your expenses and income by connecting your bank to the program. This software was made to make budgeting and other parts of personal finance easier and save you time in the long run.
Budgeting Blog
Read our budgeting blog, where we go over key principles in budgeting and how to make your budget succeed in the long run. Click the Icon below to see the budgeting blog: