You’ll be pleased to know that there are already several posts about budgeting on the blog. Here they are, in case you want to reference them:
It isn’t necessarily fun to make a budget and to stick to it, but if you want to amass your personal wealth, chances are good that you want to get good with money, right? So if you want to get good with money, you’ll have to learn to get organized and budget.
Financial expert Dave Ramsey essentially says that budgeting is a way of telling your money where you want it to go. Fundamentally, I don’t think it needs to be any more complicated than that. The point is to have a plan – not a perfect plan – for how every dollar and every cent is spent. You should know where your money is going to go the moment it comes in.
Once you have a plan, acting on it isn’t that hard. It’s the lack of system that often holds us back. It’s a good idea to review your finances on a monthly basis or however often you do it, but it would be even better if you had a system for how your income is going to be distributed the moment it comes in.
For example, if you get a check for $200, you should know how that money is going to be spent upfront. You might pay 10% into savings, 20% into debt, and use the remainder to cover basic living expenses, and so on.
Just remember: whatever’s left over will get spent. This is the amount that will invariably go towards covering a basic expense in your life. It might even go towards entertainment. Whatever you put away will stay there, unless you find yourself in an emergency.
Even in difficult situations, if you’re willing to problem solve, you can probably find a way to not touch your savings. I will be the first to admit that this isn’t really easy to do, but as you grow yourself, you will be willing to take more action where necessary. You won’t get caught up in the how; instead, you’ll focus on the what and the why.
So don’t underestimate what budgeting can do for you. I have a very simple system for myself, and I must say that it works pretty well.