Introduction: Mastering your finances starts with a reasonable budget. It’s not just about limiting your spending—it’s about creating a plan that helps you understand where your money goes, so you can finally catch up on bills, and maybe save some money. Here’s a simple guide to making a budget that actually works FOR YOU.

Understanding Your Cash Flow: To start, you need to know exactly what money is coming in and what’s going out:

You can use an app, pen and paper, or spreadsheets to track these. Do what works for you, this doesn’t have to look pretty.

• Income (Money In): Add up all sources of income, including your main job, side hustles, cash, and any passive income (money you get from work you’ve done in the past. Like a blog, investments, or selling digital downloads online.)
• Expenses (Money Out): Track all your expenses for a month to see where your money is going. This includes cash. Everything from rent and groceries to your marketplace shopping or McDonald’s run.

Go All Out: Be honest with yourself in tracking your expenses. Small daily purchases, like a cup of coffee, or multiple subscriptions can add up over a month and give you an inner look into possible savings areas.

Creating Budget Categories: Divide your expenses into clear categories:

Organizing your expenses into categories helps you understand where your money is going and where you might need to cut back.

• Fixed Expenses: These are costs that don’t change much or stay constant each month. These are usually essential for your daily living. This category includes rent or mortgage payments, car payments, and insurance.
• Variable Expenses: These costs can vary from month to month and include things like utility bills (which may fluctuate with the season), groceries, medications, and fun spending like smokes, eating out, shopping, and hobbies.
• Savings: It’s crucial to pay yourself first. Even if you start small, regular contributions to a girl’s trip, an emergency fund, retirement accounts, or other savings goals can secure your financial future.

Go All Out: After dividing your expenses into categories, look for areas where you can realistically cut back. For example, could you buy no-name, or reduce eating out from three times a week to once? It is important to not sacrifice everything you love in life, but maybe reduce a little so you can start to get ahead.

Setting Up Your Budget: You can use the 50/30/20 rule as a starting point. But eventually you will want to change the numbers to be more realistic to your income/expenses:

• 50% on Essentials: This covers all your necessities like rent, food, transportation, and utilities.
• 30% on Wants: It’s important to enjoy life. This covers things like smokes, fast food and shopping.
• 20% on Savings and Debt Repayment: Setting aside at least 20% of your income to savings helps build a cushion and reduce your debt, which is important for long-term financial health. Increase this percentage if you can.

Go All Out: If you have taken out a loan or financed something, make sure you set aside enough money into the appropriate categories for those payments. NSF fees and other late fees add up very quickly.

Tips for Sticking to Your Budget:

Sticking to a budget can be challenging, especially if it’s new to you. Here are strategies to keep on track:

• Automate: Setting up automatic transfers to your savings accounts can make sure you save before you have a chance to spend. Pro Tip: Set up automatic bill payments to prevent late fees.
• Cash Envelopes: (This is especially helpful for people like me with an Amazon and Marketplace shopping addiction). Using cash for variable expenses can help curb overspending. Once the cash in the envelope is gone, that’s it for the month. This physically limits your ability to overspend.
• Regular Reviews: Set an alarm to sit down at the end of each month to review your budget and adjust for the next month. This helps you stay responsive to changes in your income or expenses.

Conclusion: A budget is more than numbers on a page; it’s a roadmap for your financial journey. Adjust it as needed, and remember, the goal is staying on top off bills and getting ahead, not restriction. Embrace the process and celebrate the small victories along the way—this journey is to empower you to spend confidently on what’s truly important to you.