How to budget money

10) Last, But Not Least it Allows You to Live Life Better

Living Frugal and FreeMexico Friendcation 2016

We have said this before and will continue to say it until someone proves to us otherwise. Controlling your money will have a huge positive impact on your life!

We have a passion for budgeting and with Mint it takes us less than 10 minutes per month to check our budget.

Brittany and I believe material things only provide you with a temporary small portion of happiness. You get to enjoy them for a little while, but that fades very quickly. We are all about experiences and creating lifelong memories together!

Budgeting has enabled us to have 100%  control of our money. Allowing us to travel more, start our blogging business, quit my job, spend more time with our families, and so much more!

If you are interested in starting a budget with pen and paper we created a budgeting binder just for you. Simple input your email address in the box below and we will send it straight to your email to get started.

Also if you want to continue to the conversation and learn more about budgeting join our private Facebook group.

How do you budget your money?

How To Start Saving And Control Spending Using A Budget

Do you ever wonder where all your money goes?

Is there more month than money to pay for it?

If this is your scenario then this Budget Calculator can help you take control of your money and get your savings back on track.

There are lots of free budget planners online that can help you create your first budget template. But before you jump in, make sure that you are ready with your list of inputs necessary for creating a budget.

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budget calculator image

Elements For Creating A Budget

There are various elements that make up the income portion of your budget:

  • Net Income – Your salary after deducting taxes.
  • Rent Income – Money received from renting a house or other property.
  • Interest Income – The amount of money earned from deposits after deducting taxes.
  • Pension – The money received during retirement.
  • Other Earnings – Income received in the form of allowances, subsidies, etc.

Similarly, you can divide the monthly expense portion of your budget into the following categories:

  • Rent Expense – The amount paid for house rent or mortgage payments.
  • Groceries – The actual amount spent in your groceries.
  • Utilities – The money spent for paying water, electricity, telephone, etc.
  • Debt – The actual amount you pay for your credit card and other debts.
  • Transportation – Expenses for maintaining your car like fuel, repairs, car washes, etc.
  • Miscellaneous Expenses – The amount of money reserved for unexpected necessary expenses.
  • Savings – The amount you need to save each month.
  • Recreation/Vacation – The amount you need to allocate for your yearly family vacation for fun money.

Irregular or annual expenses can be budget busters if mishandled and must be treated differently.

The best strategy is to take the annual amount and divide it by 12 to get a monthly expense and then save that amount every month so that you have the cash on hand to pay the annual bill when it arrives. Below is a list of common expenses paid annually:

  • Insurance Premiums – The premium paid to your insurance provider every year like car, home, life, and disability.
  • School Fees – The amount you pay for your family’s education.
  • Vacation/Recreation – The amount you need to set aside for your family’s vacation and recreational needs.
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Steps To Using A Budget Calculator

  1. Set your financial goal. What do you want the end result of your budget to look like?
  2. Write down all the money coming in that makes up your income.
  3. Record all your monthly expenses and categorize them into fixed (unavoidable) or variable (avoidable) expenses. Don’t forget to include the non-monthly expenses, which includes payment for insurance premiums, school tuition fees, property taxes, etc. This list should also include your monthly debt payments.
  4. Allocate funds for miscellaneous expenses that can’t be predicted. This will serve as your emergency fund.
  5. Sit down with your spouse when setting up a budget. It is best that you agree on which expenses you need to prioritize.
  6. Set a schedule for implementing the family budget template, review your list every month, and adjust your expenses based on your needs.

Ways To Stick To Your Budget Plan

Once you’re done creating a budget, it is important that you stick to it. Sticking to your budget plan can be frustrating especially when you have big expenses coming up that weren’t anticipated. Below are tips to help you avoid this problem:

  • Evaluate your need and discuss with your spouse. Use tools like this Budget Calculator to make the process dynamic so you can add any unforeseen expenses in your next month’s budget.
  • Set a savings goal. Allocate money to save each month and build a cushion.
  • Avoid using your credit card for paying your expenses. This will give you better control over your cash.
  • Pay off your debt. Accelerate your debt payments and avoid paying only the minimum amount required on your credit card.
  • Monitor your expenses and eliminate bad spending habits.
  • Examine your spending and check which expenses you can reduce in future months.
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